Quiz - Commodity Benchmarks nature, method, dynamic, Because, difficult

ASSet_MANagemen

Why can commodity benchmarks not use a market-cap method of weighting?

A) They can, and it's the most frequently used
B) Because the industries are not considered investable
C) Because commodity futures are a zero-sum game
D) The dynamic nature of contracts makes computation prohibitively difficult

dyga

Good question. Thanks man.

I think I will go with D, but C is also attractive.

EDIT: Can I change? Now I choose C, because Schweser says that.
Book 4 page 17.



Edited 1 time(s). Last edit at Monday, May 17, 2010 at 12:06PM by Boris_7.

nannan66

answer please

thommo77

Boris gave it to you above.

ohai

C ... futures are a zero sum game

strikethree

Sry man for answering your question for you.

So can I say, since all derivatives are zero sum, market-cap method is off for all of them? Hedge funds with market neutral strategy is off as well?

skillionaire Wrote:
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> Boris gave it to you above.

PalacioHill

yeah market cap method cant work for any derivative because they are a zero sum game. The market capitalization would always be zero.

Not sure about hedge funds, because they are not a zero-sum game.

bpdulog

It's C. For sure.