CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

If interest rates are known to be going up by 0.25% each month for the next 10 months, the price of a 6-month futures contract will be ______ the price of an otherwise equivalent forward contract.
A. lower than
B. equal to
C. higher than
Explanation: The price of a futures contract will equal the price of an otherwise equivalent forward contract if interest rates are known or constant. Under this condition, any effect of the addition or subtraction of funds from the marking-to-market process can be shown to be neutral. In this case we know the interest rates, although they are not constant.

User Contributed Comments 7

User Comment
broadex great question!!!
ybavly great question!!!
ars2011 nice question
tomalot Wow! 10/10: Would answer again
janis36 superb, I recommend everyone this question!
thegabbo This is the best question in the history of the CFA exams - maybe ever!
michelebb eally useful! thanks
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