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:

Advances

Developments or progressions in a particular area, often leading to improvements or new insights.

Peer Influence

The effect that the social group an individual chooses or finds themselves in has on their behavior, attitudes, or values.

Future Orientation

The cognitive and emotional inclination to think about, plan, and prioritize the future over immediate needs or desires.

Decision Making

The process of selecting a course of action from several alternatives to achieve a desired outcome.