The real estate industry is sensitive to the interest rates. The companies operating in the real estate market make more profit when the interest rates decrease. Which of the following contracts is most likely to have a higher price for such companies?

A. Forward contract
B. Futures contract
C. Both will have the same price

Correct Answer: A

The asset price is inversely proportional to the interest rates. Therefore, the forward contracts are more likely to have a higher price than futures contracts.