How Markets Price Fed Rate Odds
Fed rate odds come from futures that settle on a month's average rate. See the day count arithmetic and a full worked example from a 2025 Fed meeting.
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Fed rate odds come from futures that settle on a month's average rate. See the day count arithmetic and a full worked example from a 2025 Fed meeting.
An event contract settles at $1 or $0, so its price is a probability. See why Yes plus No costs more than $1, and how to strip the spread back out.