A synthetic for signing a forward contract promising to buy cotton in 6 months includes: Selling cotton
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Question:
A synthetic for signing a forward contract promising to buy cotton in 6 months includes:
Selling cotton today |
Shorting cotton in the futures market |
Buying cotton today, and storing it |
A market is in contango when
Prices are expected to rise |
The longer the maturity, the higher the Futures price |
Investors are happy |
The slope of the futures curve is negative |
A market is in backwardation when
The slope of the futures curve is negative |
The prices are expected to drop |
People are acting strange |
If the storage cost for a commodity becomes increasingly expensive, futures prices also begin to increase.
True |
False |
If a stock pays dividends, the higher the dividends, the higher the higher the futures price.
True |
False |
When shorting a stock that pays dividend, an investor must pay dividends to the original owner until the stock is returned.
True |
False |
Related Book For
Financial Accounting Information For Decisions
ISBN: 978-0324672701
6th Edition
Authors: Robert w Ingram, Thomas L Albright
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