Understanding Futures Curves

The video tutorial explains futures curves, which show settlement prices for different delivery dates. It distinguishes between spot prices and futures contracts using apples as an example. The tutorial discusses how futures market pricing is determined and how market changes can shift futures curves. It also introduces normal and inverted futures curves, explaining their significance in commodity trading.

What is the spot price in the context of futures curves?

• The average price over a month

• The price set by the government

• The current market price for immediate delivery

• The price for future delivery of a commodity

How is the settlement price for a futures contract determined?

• By the government

• By the current spot price

• By the average price of the past year

• By the market's expectation of future prices

What happens to the futures curve if there is a sudden increase in demand for a commodity?

• The curve remains unchanged

• The curve shifts downwards

• The curve becomes flat

• The curve shifts upwards

Why is an upward sloping futures curve considered normal?

• Because it indicates decreasing future prices

• Because it reflects increasing future prices

• Because it shows constant future prices

• Because it is set by the government

What is an inverted futures curve?

• A curve where future prices are lower than spot prices

• A curve where future prices are higher than spot prices

• A curve that is set by the government

• A curve that remains flat over time