Why do Futures and Forward Prices differ? A closer look
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1. Context
In this short video from FRM Part 1, we explore (rather closely and in detail) the reason why futures and forward prices differ. The reason boils down to daily settlement of futures contract, interest rates and their correlation with prices of the underlying asset. The details of the reading in which this topic appears are given below:
| Area | Financial Markets and Products |
| Reading | Pricing Financial Forwards and Futures |
| Reference | Chapter 10. Pricing Financial Forwards and Futures In GARP Reference Books, Financial Markets and Products |