CFA Level I · CFA Level I Exam · Natural Resources
Compared with investing in physical commodities, gaining exposure through exchange-traded futures contracts most likely:
Futures provide exposure to the commodity's futures price, including roll return, without the need to store or insure the physical good. Storage and insurance burdens apply to physical holdings, and futures positions still carry price risk.
- Arequires the investor to take on storage and insurance costs.
- Bgives exposure to the futures price, including roll return, without physical handling.Correct
- Celiminates exposure to changes in the commodity's price.
Explanation
Futures give price exposure with margin and no physical storage, though returns include roll return from contract rolling. Storage and insurance are costs of holding physical goods, and futures remain exposed to price changes.
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