CFA Practice Question

There are 139 practice questions for this study session.

CFA Practice Question

When the spot price of a commodity is above the futures price, the commodity market is said to be in:
A. contango.
B. full carry.
C. backwardation.
Explanation: When a commodity market is in backwardation, the futures prices is below the spot price as market participants believe the spot price will be lower in the future. When spot prices are below the futures price, the market is said to be in contango.

User Contributed Comments 2

User Comment
Inaganti6 as someone who interviewed with Trafigura and applied to Glencore, I should commit suicide if I had got this wrong.
Akiva please do not commit suicide
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