No-arbitrage condition in FX forward pricing implies which relation?

No-arbitrage condition in FX forward pricing implies which relation?

• A. The forward price deviates from spot only if there is arbitrage.
• B. The forward price must equal the spot price.
• C. The forward price must satisfy F = S0 * e^{(r_d - r_f)T} to prevent arbitrage opportunities.
• D. There is no relationship between forward and spot.

Answer: (C)