- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 5. Natural Resources
- Subject 2. Risk and Returns of Natural Resources
CFA Practice Question
For a non-perishable commodity that has a cost of carry, other things being equal, we should expect a ______ for its futures prices.
B. backwardation
C. forewardation
A. contango
B. backwardation
C. forewardation
Correct Answer: A
Due the cost of carry the prices of its futures contracts should be traded higher than its spot price.
User Contributed Comments 3
| User | Comment |
|---|---|
| abs013 | What is the cost of carry? |
| KYZKYZ | Cost of carry is nothing but the storage cost |
| khalifa92 | storage and interest |