Which of the Following Can Explain a Contango

question 35

Multiple Choice

Which of the following can explain a contango?

• A)the interest rate exceeds the dividend yield
• B)the cost of carry is negative
• C)futures prices exceed forward prices
• D)the market is at less than full carry
• E)none of the above

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Definitions:

Perfectly Competitive Market

A perfectly competitive market is one in which there are many buyers and sellers, all of whom have complete market information, and where the goods being traded are identical, leading to one market price.

Incentive

A factor, monetary or otherwise, that motivates individuals or entities to act in a particular way or to pursue a certain course of action.

Advertise

The act of promoting products, services, or ideas through various media channels in order to attract or increase interest among consumers.

Market Power

The ability of a firm or group of firms to influence the price of goods or services in a market.