For Commodity Forwards and Futures, Which of the Following Statements

question 20

Multiple Choice

For commodity forwards and futures, which of the following statements is valid?

• A) The presence of a convenience yield means that the market will be in contango.
• B) Convenience yields may lead to the market being in backwardation.
• C) If there are storage costs, the convenience yield is zero-it is no longer convenient to hold the commodity.
• D) As supply becomes plentiful, convenience yields will rise.

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Definitions:

Pathogens

Microorganisms or viruses that can cause disease when they infect a host organism.

Reservoir

A reservoir is an artificial or natural lake where water is stored and often used as a source for drinking water, and for agricultural and recreational activities.

Parasitic Plants

Plants that derive some or all of their nutritional requirements from another living plant.

Nutritional Source

A food or substance that provides essential nutrients needed for growth and maintenance of life.