The quote for which of the following methods of physical delivery of a futures contract would be the cheapest?

The quote for which of the following methods of physical delivery of a futures contract would be the cheapest?
A . Free on board
B . Free alongside ship
C . In store
D . Cost, insurance and freight

View Answer

Answer: C

Explanation:

‘In store’ delivery is for delivery in a standardized location, and the buyer is handed a ‘warrant’ that allows him to pick the goods up. This is the cheapest means of physical delivery. The other prices will be higher as they involve more costs for the seller who has to get the goods on board a ship, or to the docks, or insurance and freight as well. Choice ‘c’ is the correct answer.