<Dd> F = (S − P V (D i v)) ⋅ (1 + r) (T − t) (\ displaystyle F = (S - PV (Div)) \ cdot (1 + r) ^ ((T-t)) \) </Dd> <P> where F is the current (time t) cost of establishing a futures contract, S is the current price (spot price) of the underlying stock, r is the annualized risk - free interest rate, t is the present time, T is the time when the contract expires and PV (Div) is the Present value of any dividends generated by the underlying stock between t and T . </P> <P> When the risk - free rate is expressed as a continuous return, the contract price is: </P> <Dl> <Dd> F = (S − P V (D i v)) ⋅ e r ⋅ (T − t) (\ displaystyle F = (S - PV (Div)) \ cdot e ^ (r \ cdot (T-t)) \) </Dd> </Dl>

What is a future on the stock market