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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Definitions:

Refrigerated Trailer

A type of trailer equipped with a refrigeration unit, used for transporting perishable goods at controlled temperatures.

Duct-Type Floor

A flooring system incorporating ducts for the purpose of air distribution, commonly used in vehicles or buildings for heating or cooling.

T-Bar-Type Floor

A type of flooring that incorporates T-bar structural elements, often used in construction for added stability or for the support of other building components.

Semi-Trailer

A type of trailer used in freight transport that does not have a front axle and is supported at its forward end by a road tractor or by a detachable front axle assembly known as a dolly.