The futures price of a non-storable asset is determined by the cost of carry.

Question

Quizplus · Accepted Answer

The futures price of a non-storable asset, such as electricity or certain agricultural products, cannot be determined by the cost of carry model because these assets cannot be stored and carried over time. The cost of carry model primarily applies to storable commodities, where storage costs, interest rates, and other factors influence futures prices.

The Futures Price of a Non-Storable Asset Is Determined by the Cost