CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

The insurance theory assumes that the futures curve ______

A. is in backwardation normally.
B. is in contango normally.
C. can fluctuate between contango and backwardation in the long term.
Correct Answer: A

The theory is known as "normal backwardation." Investors must be offered a risk premium to accept price risk.

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