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PRMIA Exam 8006 Topic 7 Question 54 Discussion
Actual exam question for
PRMIA's
Exam I: Finance Theory, Financial Instruments, Financial Markets ? 2015 Edition exam
Question #: 54
Topic #: 7
[All Exam I: Finance Theory, Financial Instruments, Financial Markets ? 2015 Edition Questions]
Topic #: 7
If the spot price for a commodity is lower than the forward price, the market is said to be in:
Suggested Answer:
A
When the forward prices are greater than the spot prices, the market is said to be in contango. When forward prices are lower than spot prices, the market is said to be backwarded. A short squeeze may contribute to backwardation. Choice 'a' is the correct answer.
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