Basics of Derivative Pricing and Valuation Flashcards
1
Q
The value of a forward contract at expiration is_________.
A
the value of the asset minus the
forward price
2
Q
The value of a forward contract prior to expiration is the value of the asset
minus ________.
A
the present value of the forward price
3
Q
Futures prices can differ from forward prices because of
________.
A
the effect of interest interim cash flows from the daily settlement
4
Q
put–call–forward parity
A
the put price + the value of a risk- free bond with face value equal to the forward price = the call price +the value of a risk- free bond with face value equal to the exercise price
