An Increase in the Futures Price of Milk Is an Indication

question 19

Multiple Choice

An increase in the futures price of milk is an indication that the:

• A) supply of milk will increase in the future.
• B) price of milk is expected to rise.
• C) opportunity cost of milk is higher today than it will be in the future.
• D) price of milk is expected to fall, and hence speculators would prefer to buy it in the future.

---

Definitions:

Compounded Semi-annually

This refers to the process of calculating interest on an investment or loan, with the interest being added to the principal balance twice a year, typically every six months.

Strip Bond

A bond where both the principal and regular interest payments have been separated and are sold individually.

Yield Rate

The rate of return on an investment over a specified period, expressed as a percentage, considering both interest and dividends.

Compounded Semi-annually

When interest is compounded semi-annually, it is calculated and added to the principal amount twice a year.