CFA Practice Question

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CFA Practice Question

For a non-perishable commodity that has a cost of carry, other things being equal, we should expect a ______ for its futures prices.

A. contango
B. backwardation
C. forewardation
Correct Answer: A

Due the cost of carry the prices of its futures contracts should be traded higher than its spot price.

User Contributed Comments 3

User Comment
abs013 What is the cost of carry?
KYZKYZ Cost of carry is nothing but the storage cost
khalifa92 storage and interest
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