- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 51. Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives
- Subject 2. Costs and Benefits Associated with Owning the Underlying
CFA Practice Question
As the carry benefits increase, the forward price ______.
B. decreases
C. may increase or decrease
A. increases
B. decreases
C. may increase or decrease
Correct Answer: B
Benefits reduce the cost of carrying the asset, and that reduces the forward price.
User Contributed Comments 1
| User | Comment |
|---|---|
| dbedford | Think of benefits as payouts. So as the items pays out its value over time it's future value is decreased |