Reviewed by: R. Saikiran. This guide is written for candidates who want a quick but practical revision note before attempting mock tests.
Core Idea
Futures pricing connects spot price with carrying cost, interest, income, storage, and time to expiry. The exact factors depend on the underlying asset.
Basis
Basis is the difference between spot price and futures price. It changes as expiry approaches and is important for hedging questions.
Exam Tip
When the question talks about dividends or income, remember that income can reduce the theoretical futures price compared with pure carrying cost.
Key Terms to Remember
- futures pricing
- cost of carry
- basis
- spot price
- derivatives
How to Practise
After reading this guide, attempt the related mock-test sets and review the explanations for skipped or incorrect questions. The goal is not memorising one answer, but recognising the concept in new scenarios.
Common Mistakes
Candidates often rush through familiar terms and miss the exact condition in the question. Slow down when the question includes time period, client profile, product type, regulatory role, risk level, or calculation data.
Revision Checklist
- Understand the core definition.
- Know where the topic appears in the exam category.
- Practise at least one related mock set.
- Review every wrong and skipped answer.
- Verify current rules through official sources where regulation is involved.