CFA CFA Level 1 Question of the Week – Alternative Investments

Question of the Week – Alternative Investments

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    • Avatar of AdaptPrepAdaptPrep
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        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:

        • Contango has become less extensive
        • Rolls have become more expensive
        • Potential for bubbles has increased
      • Avatar of shannondailyshannondaily
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          Boo! I got it wrong. :neutral_face: 

        • Avatar of AdaptPrepAdaptPrep
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            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.

          • Avatar of CosmicDylanCosmicDylan
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              Gah, missed the word least in there.

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              that’s where I make the mistake usually.

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