__________ Is a Term Used to Indicate That the Futures

question 4

Multiple Choice

__________ is a term used to indicate that the futures price is higher than the spot price.

• A)Backwardation
• B)Arbitrage
• C)Leverage
• D)Contango
• E)Margin

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers, resulting in a stable market condition.

Marginal Consumer

A consumer who is indifferent between purchasing and not purchasing an additional unit of a good, based on the current price.

Social Cost

The total cost of an activity to society, including both private and external costs.

Private Cost

The costs that an individual or company incurs in the production of goods or services, excluding any externalities.