n Investment Analysts Journal - Investment basics XXXIX. The relationship between futures and spot prices
|Article Title||Investment basics XXXIX. The relationship between futures and spot prices|
|© Publisher:||Taylor & Francis|
|Journal||Investment Analysts Journal|
|Author||J.U. De Villiers|
|Publication Date||Jan 1999|
ISI Social Science
Extracted from text ... Number 49 - Part 6 JU de Villiers* Investment Basics XXXIX. The relationship between futures and spot prices* 1. Forward and spot prices In a perfect market, the forward price on a non-dividend paying security is determined by the cost of carry relationship. To own the security in the future, investors could either enter into a forward contract now to purchase the security at price F0, t in the future, or they could buy the security now at a price S0 and keep it till the future date. If they buy the security now they have to finance the purchase ..
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