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:

Exclusivity of Possession

The legal right granted to a tenant or lessee to use and possess a property to the exclusion of others, including the landlord under certain agreements.

Common Law

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Licence

A licence is an official permission or permit to do, use, or own something, often granted by an authority and subject to certain conditions.

Innkeepers Act

Legislation that outlines the rights and obligations of hoteliers or innkeepers and their guests, including matters of liability and service provision.