In Summarizing the Effect of Carry on the Difference Between

question 10

Multiple Choice

In summarizing the effect of carry on the difference between the futures price and the cash market price in this way, which of the below statements is FALSE?

• A) If the carry is positive (y > r), then the futures price will sell at a discount to cash price (F < P).
• B) If the carry is negative (r > y), then the futures price will sell at a premium to cash price (F > P).
• C) If the carry is zero (r = y), then the futures price will be equal to the cash price (F = P).
• D) None of these

---

Definitions:

Deductibility

The extent to which an expense can be subtracted from gross income to reduce taxable income and lower the tax liability.

Written Acknowledgment

A written statement confirming the receipt of something, often used in tax documentation for charitable donations.

Charitable Organization

A nonprofit entity that operates to perform charitable acts, provide education, religious, or public service activities, eligible for tax-exempt status under the IRS.

Charitable Deduction

A tax deduction that taxpayers can claim for donations made to qualifying charitable organizations.