Ignoring Convenience Yields, the Theoretical Futures Price for a Commodity

question 5

Multiple Choice

Ignoring convenience yields, the theoretical futures price for a commodity with a positive cost of carry should typically exhibit

• A) Backwardation.
• B) Contango.
• C) Either backwardation or contango depending on the delivery month.
• D) Either backwardation or contango depending on the initial level of the spot price.