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Derivatives

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21 July 2013 future price = spot price + risk free rate of intrest. while trading in futures we consider risk free rate of interest why so?
do always a person gets money on risk free rate of interest in order to do arbitrage
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CS Pawan Kumar Baid

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CS Pawan Kumar Baid (Expert)
22 July 2013 why risk free rate is used is because, this is the minimum return which you will get provided you have not traded in this future.

hence it shows the minimum value of future.

kindly correct this formula to

Future = Spot + Rf (-) Dividend

Regards

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