It assumes that markets are perfectly efficient. This means no difference between spot and futures prices, and it thereby eliminates any chance of arbitrage. Arbitrage is a process by which traders take advantage of a price difference in two markets. Under this model, traders are indifferent towards both markets as their earnings are the same from both. Futures price will be equal to... https://topcollegesadmission.in/college-list/mbapgdm/indore