Which of the Below Statements Is FALSE

question 47

Multiple Choice

Which of the below statements is FALSE?

• A) It is important to note that, in the absence of initial and variation margins, the theoretical price for the contract is technically the theoretical price for a forward contract, not the theoretical price for a futures contract.
• B) For cash and carry trade, the futures price that would produce no arbitrage profit is: F = P + P(rB - y) where P is the repayment of principal of loan, rB is the borrowing rate, and y is the cash yield.
• C) For reverse cash and carry trade, the futures price that would prevent a riskless profit is: F = P + P(rL - y) where P is the repayment of principal of loan, rL is the lending rate, and y is the cash yield.
• D) In deriving the theoretical futures price, we consider transaction costs of the elements in the arbitrage strategies.

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Market Basket

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A quantitative method used to determine the economic threshold that defines poverty, based on income, consumption, or other social indicators.

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Non-material assets such as education, intellect, style of speech, and appearance that enable social mobility and prestige.

Developmental Capital

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