PRMIA Exam 8006 Topic 7 Question 54 Discussion

Actual exam question for PRMIA's 8006 exam

Question #: 54
Topic #: 7

[All 8006 Questions]

If the spot price for a commodity is lower than the forward price, the market is said to be in:

Acontango

Bbackwardation

Ca short squeeze

Ddisequilibrium

Show Suggested Answer

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.

by Laurel at Jun 29, 2022, 03:36 AM

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