If the spot price and futures price on a gold contract are $553 and $555,respectively,then theoretically the carrying cost should be equal to:
A)$2 or more.
B)between $0 and $2.
C)cannot be determined.
D)$2.

Question

Quizplus · Accepted Answer

The carrying cost is the difference between the futures price and the spot price, which is $555 - $553 = $2. Therefore, the carrying cost should be $2 or more.

If the Spot Price and Futures Price on a Gold