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Question of the Week - Alternative Investments

AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
edited April 2016 in Level 1 Questions

The commodity market initially grew due to producers desiring a hedging vehicle. Recently institutions like pension plans and hedge funds have looked to commodities as a way to diversify and grow, respectively.

Which of the following least describes the impact this institutional money has had?

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Question of the Week - Alternative Investments 15 votes

Contango has become less extensive
60%
AdaptPreparsenal93mzn710BeregondPahtsanpabulumsyadeesh89hakziaaronpcjb 9 votes
Rolls have become more expensive
26%
paulopitamdlynch3gahamiltavannoord 4 votes
Potential for bubbles has increased
13%
ctownballer03BlueJay3535 2 votes

Comments

  • AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
    Contango has become less extensive

    All of the above have been a part of the change in commodities except contango becoming less extensive. In fact, the opposite is true. Backwardation used to be the norm, since producers had to pay a premium in order to hedge. As investors and speculators have increased, that situation has become less prevalent.

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