Future contract price and spot price in the future

CFA Level II
#1

Dear All:

For example, I buy a future ontract to buy gold in 6 months for $1000 per ounce which the future price but 6 months from now the price of gold can be 1020 or less depend on the supply and demand. so how can the future price be equal to the price of the underlying assets .

thank you so much for your time

At the expiration of a futures contract, the futures price is:

A) the same as the price at the initiation of the contract. B) above or below the market price, depending on supply and demand. C) equal to the market price for immediate delivery of the asset.

Your answer: B was incorrect. The correct answer was C) equal to the market price for immediate delivery of the asset.

At expiration, the futures price is equal to the price of the asset for immediate delivery because the contract calls for delivery of the asset on that date. Note that at expiration, the spot price and the futures price are equal.

#2

Well, the question says at expiration. At expiration there is not future price since you are now there. So the spot and future price at the same. I thought about going into a long explanation that involved Doc Brown, a Delorian and a flux capacitor but I thought that would just be more confusing…