Commodities Multiple Choice Questions

Why do investors invest in Commodities?

• Liquidity management

• Protection against inflation

• High correlation to traditional investments (stocks and bonds)

• Access to large-cap commodities firms

What is the purpose of futures contracts in commodities trading?

• To predict the weather for farming

• To secure future prices for commodities

• To control the supply of commodities

• To regulate commodity exchanges

Which term best describe the price pattern where future prices are above the spot prices?

• Arbitrage

• Convenience yield

• Contango

• Backwardation

Which of the following commodities is most sensitive to geopolitical tensions?

• Gold

• Coffee

• Corn

• Cotton

Which of the following is a characteristic of the Bloomberg Commodities Index (BCOM Index)?

• Precious metals dominated the other fours group of sectors in the index

• Index consists of 20 commodities

• Index weights are determined by commodity production levels

• Diversified index which has no sectors has more than 33% of the index

What is the primary objective of a risk balanced beta portfolio?

• Maximizing short-term gains

• Achieving consistent performance across economic conditions

• Speculating on market trends

• Minimizing portfolio diversification

What is a key principle underlying risk balanced beta portfolio strategy?

• Timing the market for short-term gains

• Leveraging investments during economic downturns

• Balancing risk exposures across asset classes

• Ignoring economic factors in portfolio management

Which economic environments is the risk balanced beta portfolio designed to perform well in?

• Economic growth and recession only

• Inflation and deflation only

• All economic environments

• Economic stagnation and hyperinflation only