Question

In: Finance

When a commodity is trading backwardation in the futures market, 1 point a. There are buyers...

When a commodity is trading backwardation in the futures market,

1 point

a. There are buyers who need delivery immediately

b. The warehouses are full

c. it means that history will repeat itself

d. people are staying home

Solutions

Expert Solution

Backwardation is a situation when spot rate of an underlying asset is higher than future rate and it will also mean that underline asset is highly demanded at the present situation so there will be buyers who are needing the delivery immediately of that particular commodity.

All the other options are false

Correct answer will be option ( A ) There are buyers Who need delivery immediately.

jeff jeffy answered 2 years ago
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