AuthorTopic: Help me with this question plz.
sbajaj
@2006-10-19 16:15:01
A major benefit of investing in commodity -linked securities rather than holding commodities is that :

A. commodity-linked securities may provide current income

B. counter-party risk is lower with commodity -linked securities

C. There is higher liquidity in the commodity-linked securities market

D. Commodity -linked securities can provide higher speculative profits


The correct answer is A. Any explanations why?
yale02
@2006-10-19 19:34:20
hey sbajaj:

according to the cfa text, commodity-linked securities 'are linked to some commodity prices and also provide some income'. they contrast this with holding actual commodities, which provide 'no income' because the 'sole return to the owner is through price increase'. this makes sense, since some commodity-linked securities include bonds, which pay coupons linked to commodity prices (typically oil).
sbajaj
@2006-10-19 23:13:26
Thanks yale02, that was helpful.

CFA Discussion Topic: Help me with this question plz.

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