1. Which of the following is true for a consumption commodity?
A) There is no limit to how high or low the futures price can be, except that the futures price cannot be negative
B) There is a lower limit to the futures price but no upper limit
C) There is an upper limit to the futures price but no lower limit, except that the futures price cannot be negative
D) The futures price can be determined with reasonable accuracy from the spot price and interest rates.
2. True or False. Closely held firms (where managers and insiders hold a substantial portion of the outstanding stock) are less likely to increase leverage quickly than firms with widely dispersed stockholdings. Explain.