In summarizing the effect of carry on the difference between the futures price and the cash market price in this way, which of the below statements is FALSE?
A) If the carry is positive (y > r) , then the futures price will sell at a discount to cash price (F < P) .
B) If the carry is negative (r > y) , then the futures price will sell at a premium to cash price (F > P) .
C) If the carry is zero (r = y) , then the futures price will be equal to the cash price (F = P) .
D) None of these
Correct Answer:
Verified
Q11: You lend $2,000 at 12% per year
Q12: Consider the "reverse cash and carry trade"
Q13: Which of the below statements is FALSE?
A)
Q14: You lend $200 at 8% per year
Q15: You borrow $1,000 at 16% per year
Q17: Which of the below statements is FALSE?
A)
Q18: Which of the below statements is FALSE?
A)
Q19: Consider the "reverse cash and carry trade"
Q20: You lend $1,000 at 10% per year
Q21: To show how to calculate the hedge
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents