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The recent growth of market in financial future contracts provides a great source of information about how people think stock and bond prices will move
The recent growth of market in financial future contracts provides a great source of information about how people think stock and bond prices will move the future. For instance, if the futures price on S&P500 is well below the current price then this implies that the market increasingly pessimistic about the future prospect of the stock market.
(Hint. F0 = E[ST] e^(r-k)T ; where F0, ST, r, k, and T are future price, spot price at T, risk-free rate, expected return, and maturity respectively)
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