112 Forwards and FuturesUnder stochastic interest rates, we will show thatforward and futures contracts are distinctsecurities and that forward and futures prices are(usually) different quantities. This distinction is not uniformly understood. There are still textbooks available which confusethese two contacts. One contract cannot be used (in a simple fashion)to arbitrage the other, contrary to occasionalpractice. The futures contracts analyzed here are simplifiedversions of the exchange-traded futures contracts (see Chapter 1).
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