If There Is a Convenience Yield,then the Following Is True

question 15

Multiple Choice

If there is a convenience yield,then the following is true of the forward price:

• A)The forward price is higher than it would be if there were no convenience yield.
• B)The bid price may be higher than the ask price on the forward.
• C)The forward price does not depend on the convenience yield.
• D)The forward price is lower than it would be with no convenience yield.

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Definitions:

Business Tax

Taxes imposed on the income or profit of businesses, varies by country and the type of business.

Demand Curve

A graphical representation of the quantity of a good or service demanded by consumers at various prices, typically downward sloping indicating an inverse relationship between price and quantity demanded.

Average Revenue Curve

A graphical representation showing how the average revenue per unit sold changes with changes in the quantity of the product sold.

Marginal Revenue Curve

A graphical representation showing the additional revenue a firm can earn by selling one more unit of a good or service.