As Inventories of a Commodity Decline,which of the Following Is

question 2

Multiple Choice

As inventories of a commodity decline,which of the following is true?

• A) The one-year futures price as a percentage of the spot price increases
• B) The one-year futures price as a percentage of the spot price decreases
• C) The one-year futures price as a percentage of the spot price stays the same
• D) Any of the above can happen

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Definitions:

Exploiting

Utilizing resources or people in an unfair manner for one's own advantage or benefit.

Vertical Integration

A strategy where a company expands its operations into different stages of production within its industry, from raw materials to final product sales.

Gold Mine

A gold mine is a site used for extraction of gold from the earth, and metaphorically, it refers to a rich or valuable resource that promises significant returns or advantages.

Hierarchical

Pertaining to a system or organization where individuals or entities are ranked according to levels of importance or authority.