Which of the following is true?
A. The futures rates calculated from a Eurodollar futures quote are always less than the corresponding forward rate
B. The futures rates calculated from a Eurodollar futures quote are always greater than the corresponding forward rate
C. The futures rates calculated from a Eurodollar futures quote should equal the corresponding forward rate
D. The futures rates calculated from a Eurodollar futures quote are sometimes greater than and sometimes less than the corresponding forward rate
B
The futures rate must be reduced by what is known as a convexity adjustment to get the forward rate.
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