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What is No Arbitrage in Forward Contracts about?

This lecture introduces the no arbitrage principle and its application in pricing financial derivatives, particularly forward contracts. The principle asserts that no riskless profit can be made without an initial investment, leading to the determination of forward prices using market conditions. The discussion also covers the mechanics of forward contracts, including long and short positions, settlement methods, and the relationship between forward prices and spot prices.

Author

sharma.surbhi0907

Language

EN