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LOS a: Explain the relationship between spot prices and expected future prices in terms of contango and backwardation.
Q1. Which of the following best defines a backwardated commodities market?
A) The futures price is below the current spot price.
B) The futures price is below the expected future spot price.
C) The futures price is above the current spot price.
Q2. Which of the following best defines a contango commodities market?
A) The futures price is above the current spot price.
B) The futures price is below the expected future spot price.
C) The futures price is below the current spot price.
Q3. In the futures market for a variety of wheat, suppose breakfast cereal companies are the dominant market participant. What will be the most likely shape of the futures price curve?
A) An upward sloping curve, reflective of contango markets.
B) A downward sloping curve, reflective of contango markets.
C) An upward sloping curve, reflective of backwardated markets.
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发表于 2009-3-2 09:13
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