ok tell me if S>F can there be a “contango” or “Normal Contango” ?? and If S>F can the expected spot be greater than the current futures price ??
>I think with the contango one (and only because I spoke to my colleague who >remembers it clearer)…the solutions were >a. contango >b. normal contango >c. normal backwardation The answer is a There is contango and normal backwardation. Never heard of normal contango. I think that’s where the trick in this question was.
dla35 Wrote: ------------------------------------------------------- > >I think with the contango one (and only because I > spoke to my colleague who >remembers it > clearer)…the solutions were > >a. contango > >b. normal contango > >c. normal backwardation > > The answer is a > > There is contango and normal backwardation. Never > heard of normal contango. I think that’s where the > trick in this question was. open the book and you may get surprised http://www.bionicturtle.com/learn/article/contango_backwardation_expected_future_price
my input on economics of scale question i have choose answer economics of scale mainly bcoz it was given that fixed cost had not contributed … since mainly we can achieve economics of scale by reducing fixed cost …which is not happening in question given in the exam … i have definition of economics of scale from investopedia "The increase in efficiency of production as the number of goods being produced increases. Typically, a company that achieves economies of scale lowers the average cost per unit through increased production since fixed costs are shared over an increased number of goods. "