Question

QUESTION 25 Normal Backwardation occurs when the futures contract price IFO) is less than the spot market price (50) and thereby leading to the futures price moving upward over time to converge with the spot price at settlement. True False QUESTION 26 A Seasoned offering (Secondary Offering) is where a primary securities offering is made by a company which already has publicy traded securities outstanding in the securities markets. True False

Answer 1

Question 25

True

Normal backwardation happens when futures price is less than expected future spot price. so as the maturities increase, futures price increases to merge with expected future spot price. opposite of this is called Contango.

Question 26

False

The statement is mostly true except one thing that the securities offered in Seasoned offering are not primary securities. these are additional securities offered in the secondary market.

primary securities offering is called initial public offering.