Investing commodities
3. In the futures market for a variety of wheat, suppose breakfast cereal companies are
the dominant market participant. What will be the most likely shape of the futures price
curve?
A) roll yield.
B) collateral yield.
C) current yield.
6. Which of the following will result from the term structure of futures prices for a particular
commodity being in contango?
7. Which of the following best describes why adding a commodities index position to a
portfolio of stocks and bonds may be beneficial? Commodities index positions:
8. Which of the following market conditions most accurately describes the conditions of a
particular commodity market for the roll yield to be positive?
A) Contango.
B) Market is dominated by long hedgers.
C) Futures prices are lower than spot prices.
9. Which of the following most accurately describes a reason why a commodity index
strategy should be considered an active strategy?
10. Which of the following activities by a manager using a commodity index strategy is
most likely to be classified as active management?
By policy, always rolling expiring 180-day T-Bills posted as collateral into new 180-
A)
day T-Bills.
B) Duplicating the component rebalancing scheduling of the benchmark.
C) Rolling futures contracts over two days before the benchmark’s rollover date.
1B 2A 3A 4B 5B 6B 7A 8C 9B 10C