The cost of carry futures pricing model requires that investors be able to sell short the commodity.

Question

Quizplus · Accepted Answer

The cost of carry futures pricing model is based on the relationship between the futures price, the spot price, and the cost of carrying (or holding) the commodity until the futures contract expires. It does not require the ability to sell short the commodity; rather, it involves considerations such as storage costs, interest rates, and convenience yield.

The Cost of Carry Futures Pricing Model Requires That Investors