CFA CFA Level 1 Question of the Week – Alternative Investments

Question of the Week – Alternative Investments

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    • AdaptPrep
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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
    • CosmicDylan
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      Gah, missed the word least in there.

    • nar_bsoa
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      that’s where I make the mistake usually.

    • AdaptPrep
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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.

    • shannondaily
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      Boo! I got it wrong. :neutral_face: 

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