Q167
Contango charge is paid by __________.
A.
bull speculator to bear speculator
AnswerB.
bear speculator to bull speculator
C.
lame duck to bull speculator
D.
stag to under writer
Answer: Option A
Solution
Answer: Option A
Solution:
Contango charge is paid by bull speculator to bear speculator. When the spot price is higher than the futures price, the market is said to be in backwardation. It is often called 'normal backwardation' as the futures buyer is rewarded for risk he takes off the producer. If the spot price is lower than the futures price, the market is in contango".