About Lesson
a. Future prices can differ from the forward prices because of interest rates on the interim cash flows from the daily settlement.
b. If the interest rates are constant or have zero correlation with the futures prices then the forward and the future prices would be the same.
c. If futures prices are negatively correlated with the interest rates then it would be preferable to buy forwards than futures.
d. If, however, the futures prices are positively correlated with the interest rates then it would be preferable to buy futures than forwards.