Anyone remember what the question was asking? I remember it asked in what condition the price of FORWARD is larger than that of FUTURE…some people seem to think the other way around.

i think the question was when future is larger than forward…isn’t it? it was something to do with positive correlation of interest rates…

Positive correlation of interest rates = Future value > Forward value

I agree with your answers, but I think the question was asking when forward is larger than future, in that case, you should choose negative relation bet future and i…I almost put down the positive answer, but i reread the question and changed my answer…

2 answers were given, one stated forward prices are higher than futures if interest rates were positively correlated. the other futures prices are higher if i’s positively correlated. both answers stated that i’s were positively correlated, so it came down to those two…

hk, thanks for refreshing me on that…maybe I remember wrong I thought there is one about negative relationship…thx

mdecav Wrote: ------------------------------------------------------- > Positive correlation of interest rates = Future > value > Forward value This answer is correct, I’m 100% sure. Futures are marked to market daily, so if the price goes up when rates go up, then you get the cash to invest at a higher rate.

Question asked why Futures more than Forwards, not other way around.

Yep, futures > forwards when interest rates +ve correlated due to mark-to-market feature and reinvesting for gains. This is ONE I was clear on.