NISM Certifications · NISM-Series-XV: Research Analyst · Fundamental Analysis of Commodities
A market where the futures price of a commodity is lower than its spot price is described as:
Such a market is in backwardation. Futures trade below the spot price, typically because of current scarcity or a high convenience yield for holding the physical commodity. Contango is the reverse situation, where futures trade above spot reflecting carrying costs.
- ABackwardationCorrect
- BContango
- CFull carry market
- DCash-and-carry parity
Explanation
Backwardation occurs when futures trade below spot, often due to supply shortages or high convenience yield. Contango is the opposite, with futures above spot. Full carry refers to a futures price that reflects all carrying costs.
Did you get it right without looking?
One question tells you little. A timed set on Fundamental Analysis of Commodities shows your real accuracy, how long you take and where you lose marks.
More Fundamental Analysis of Commodities questions
- Which of the following developments would most likely push up the price of crude oil, other things being equal?
- In commodity markets, the term 'contango' describes a situation in which:
- In commodity markets, the term 'contango' describes a situation where:
- Which of the following would generally be expected to push up the price of crude oil, other things remaining equal?
- A refiner expects to buy crude oil in 2 months and fears a price rise. Spot crude is Rs 6,000 per barrel. The refiner buys futures at Rs 6,1…
- For agricultural commodities such as wheat and pulses in India, which factor is generally most important in determining the floor level of d…