The value of a futures contract for storable commodities can be determined by the _______, and the model __________ consistent with parity relationships.
A) CAPM; will be
B) CAPM; will not be
C) APT; will not be
D) APT; will be
E) CAPM and APT; will be

Question

Quizplus · Accepted Answer

The value of a futures contract for storable commodities can be determined by both the Capital Asset Pricing Model (CAPM) and the Arbitrage Pricing Theory (APT), as both models can be used to estimate the expected return on assets, including futures contracts. The model will be consistent with parity relationships because both CAPM and APT take into account various factors that ensure no arbitrage opportunities exist, aligning with the concept of parity in futures pricing.

The Value of a Futures Contract for Storable Commodities Can