In the Absence of Arbitrage Opportunities, the Forward Contract Price

question 65

Multiple Choice

In the absence of arbitrage opportunities, the forward contract price should be equal to the current price plus

• A) contract price.
• B) the cost of carry.
• C) margin requirement.
• D) the price discovery rate.
• E) the convenience return.

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Definitions:

Highest Productivity

The maximum level of efficiency in which goods and services are produced with the least amount of resources in a given time period.

Principle of Specialization

A core principle that suggests individuals or organizations are more efficient and effective when they focus on a limited set of tasks or a specific area of expertise.

Classical Management Approaches

Early theories of organizational management focusing on efficiency, hierarchy, and clear division of labor.

Adult Personality

The patterns of thoughts, feelings, and behaviors that are characteristic of an adult and distinguish them from others.