Studies of the performance of cost-of-carry models have concluded that:

A) the volatility of mispricing has decreased over time
B) the volatility of mispricing has increased over time
C) the average level of mispricing has decreased over time
D) the average level of mispricing has increased over time

Question

Studies of the performance of cost-of-carry models have concluded that:

A) the volatility of mispricing has decreased over time
B) the volatility of mispricing has increased over time
C) the average level of mispricing has decreased over time
D) the average level of mispricing has increased over time

Quizplus · Accepted Answer

Studies have found that the degree of mispricing has apparently decreased over time,which is consistent with increased maturity in the market and an increasing prevalence of arbitrage traders.

Studies of the Performance of Cost-Of-Carry Models Have Concluded That