Assume the Futures Price of a Commodity Is Equal to the Future

question 75

Multiple Choice

Assume the futures price of a commodity is equal to the future value of the cash price, calculated at the risk-free rate. Given this, which one of the following terms applies to the market for this commodity?

• A)positive basis equilibrium
• B)humped market
• C)inverted market
• D)time equilibrium
• E)spot-futures parity

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Definitions:

Moral Development

A process through which individuals evolve their understanding of what is right and wrong, often described through stages by psychologists.

Lawrence Kohlberg

An American psychologist best known for his theory of stages of moral development.

Utilitarian Theories

A set of ethical theories that posit that the best action is the one that maximizes utility, typically defined as that which produces the greatest well-being of the greatest number of people.

Cost-benefit Analysis

A systematic approach to estimating the strengths and weaknesses of alternatives used to determine options which provide the best approach to achieve benefits while preserving savings.