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:

Concur

To agree or have the same opinion.

Suffix

A morpheme added at the end of a word to alter its meaning or grammatical function, such as "-ness" or "-ly".

Fly

In the context of an organism, a fly is a small winged insect belonging to the order Diptera; known for its ability to fly quickly.

Suffix

A morpheme added at the end of a word to form a derivative or to indicate grammatical features such as tense, mood, person, number, case, and gender.