Normal Backwardation

question 67

Multiple Choice

Normal backwardation

• A) maintains that, for most commodities, there are natural hedgers who desire to shed risk.
• B) maintains that speculators will enter the long side of the contract only if the futures price is below the expected spot price.
• C) assumes that risk premiums in the futures markets are based on systematic risk.
• D) maintains that, for most commodities, there are natural hedgers who desire to shed risk, and that speculators will enter the long side of the contract only if the futures price is below the expected spot price.
• E) maintains that speculators will enter the long side of the contract only if the futures price is below the expected spot price and assumes that risk premiums in the futures markets are based on systematic risk.

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