1. In what sense are the forward risk premium and the bidask spread on forward contracts both...

Question:

1. In what sense are the forward risk premium and the bid–ask spread on forward contracts both related to risk?

Does the fact that the bid–ask spread is always positive and yet the forward risk premium can be positive or negative suggest that the nature of the two risks is different?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: