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19.Which of the following describes contango?
A.The futures price is below the expected future spot price
B.The futures price is below today’s spot price
C.The futures price is a declining function of the time to maturity
D.The futures price is above the expected future spot price
A.The futures price is below the expected future spot price
B.The futures price is below today’s spot price
C.The futures price is a declining function of the time to maturity
D.The futures price is above the expected future spot price
Answer: D
Contango is defined as the futures price being above the expected future spot price. It is also sometimes used to describe the situation where the futures price is above the spot price.
Contango is defined as the futures price being above the expected future spot price. It is also sometimes used to describe the situation where the futures price is above the spot price.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015