Which One of the Following Statements Is Correct Concerning an Inverted

question 42

Multiple Choice

Which one of the following statements is correct concerning an inverted futures market?

• A)The basis will be negative.
• B)The basis will equal zero.
• C)The cash price will equal the futures price.
• D)The cash price will exceed the futures price.
• E)Arbitrage opportunities must exist.

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Definitions:

Voidable Contract

A valid agreement that one or more parties can legally cancel if they choose, due to reasons such as fraud or lack of capacity to consent.

Material Misrepresentation

False or misleading statements that significantly affect another party's decision in a transaction.

Reasonable Person

A hypothetical individual in the legal system who exercises average care, skill, and judgment in conduct and is used as a standard to assess behavior.

Duress By Physical Force

The use of physical force or threats to compel someone to act against their will or to consent to an agreement.