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Problem 5.23. What is meant by (a) an investment asset and (b) a consumption asset. Why is the distinction between investment and consumption assets
Problem 5.23. What is meant by (a) an investment asset and (b) a consumption asset. Why is the distinction between investment and consumption assets important in the determination of forward and futures prices? An investment asset is an asset held for investment by a significant number of people or companies. A consumption asset is an asset that is nearly always held to be consumed (either directly or in some sort of manufacturing process). The forward/futures price can be determined from the spot price for an investment asset. In the case of a consumption asset all that can be determined is an upper bound for the forward/futures price.
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