The forward price of a physical asset is affected by:

The forward price of a physical asset is affected by:
A . the spot price, the risk-free rate, carrying costs, any other cash flows from holding the asset and the volatility of spot prices
B . the spot price, the risk-free rate, carrying costs, any other cash flows from holding the asset and the time to maturity of the forward contract
C . the spot price, the risk-free rate, carrying costs and any other cash flows from holding the asset
D . The spot price of the asset and the market’s prevailing view of the commodity’s direction in the future

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Answer: B

Explanation:

Choice ‘b’ lists all the factors that affect the forward price of a physical asset and is the most complete answer. Forward prices for physical assets are not affected by volatility (only options are), nor are they arbitrarily decided by any prevailing ‘views’.