LOS q: Explain the motivation for investing in commodities, commodities derivatives, and commodity-linked securities.
Q1. Commodity-linked securities may be appropriate for investors:
A) prohibited from owning physical assets.
B) seeking speculative profits in the commodities market.
C) seeking investments that are negatively correlated with inflation.
Q2. All of the following are examples of commodity-linked equities EXCEPT:
A) a gold mining company.
B) an oil and gas exploration company.
C) a supermarket operating company.
Q3. In periods of rising inflation, commodities can act as a hedge to a portfolio of stocks and bonds because the:
A) commodities will typically appreciate in price while the prices of the stocks and bonds may decline.
B) commodities will not be affected by a rise in inflation.
C) commodities can provide current income to offset any price decreases in the stocks and bonds.
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