When F_₀,T E(S_T)it is known as A) Backwardation. B) Normal backwardation. C) Normal contango. D) Inverted spread. E) Pure expectations equilibrium.

Name: When F ₀,T > E(S T )it is known as A) Backwardation. B) Normal backwardation. C) Normal contango. D) Inverted spread. E) Pure expectations equilibrium.
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Question

When F_₀,T > E(S_T)it is known as A) Backwardation. B) Normal backwardation. C) Normal contango. D) Inverted spread. E) Pure expectations equilibrium.

Quizplus · Accepted Answer

Normal contango occurs when the futures price (F₀,T) is greater than the expected future spot price (E(Sₜ)).

When F₀,T > E(ST)it Is Known as

When F_₀,T > E(S_T)it Is Known as