Which one of the following best defines a carrying-charge market?
A)interest is charged on the margin balance
B)cash price is less than the futures price
C)positive basis market
D)spot market price is greater than the cash price
E)spot market price exceeds the futures price

Question

Quizplus · Accepted Answer

A carrying-charge market is characterized by a situation where the cash price of a commodity is less than its futures price. This reflects the costs associated with storing and insuring the commodity until the future delivery date, as well as the interest costs for financing the holding of the commodity.

Which One of the Following Best Defines a Carrying-Charge Market