Normal Backwardation

question 24

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)A and B.
• E)B and C.

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Definitions:

Owner's Capital Account

An equity account that represents the amount of money that the owner has invested in the business plus any profits or minus any losses.