CFA Practice Question

There are 139 practice questions for this study session.

CFA Practice Question

For a commodity if futures prices prices are above the spot price then the market, then the market is most likely to be:
A. in backwardation.
B. in contango.
C. trading at a premium.
Explanation: When a commodity is in contango, futures prices are higher than the spot price because market participant believe that that the spot price will be higher in the future.

User Contributed Comments 1

User Comment
Inaganti6 As someone who applied to Glencore, Ivan Glasenberg would laugh at my face if I got this question wrong.
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