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.

Understand market equilibrium and the effects of supply and demand changes on equilibrium price.

Analyze the impact of external factors, such as technological advancements or resource price changes, on market supply and demand.

Grasp the concept of complementary and substitute goods in the context of market strategies.

Understand the economic implications of shifts in supply curves due to both natural events and economic factors.

---

Definitions:

Weekly Wages

Weekly wages refer to the total amount of money earned by an employee within a week for their labor or services.

Materials

The tangible physical substances used in the production of goods or the execution of services and projects.

Gourmet Cupcake

A high-quality, often artistically decorated cupcake that is made with fine ingredients and presented as a luxury item.

Weekly Wages

The total amount of compensation that an employee receives on a weekly basis, typically as a result of hourly work or a fixed salary.