
Understanding Contango and Its Market Implications

Interactive Video
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Business, Economics
•
10th Grade - University
•
Hard

Emma Peterson
FREE Resource
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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What does it mean when a market is in contango?
The market is experiencing a surplus.
The market is experiencing a shortage.
The future price is higher than the spot price.
The spot price is higher than the future price.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why is contango considered normal in markets?
It reflects the immediate demand for commodities.
It shows a market surplus.
It accounts for opportunity and storage costs.
It indicates a market shortage.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a characteristic of severe contango?
Spot price is much higher than the future price.
Spot price is much lower than the future price.
Spot and future prices are equal.
Spot price is slightly higher than the future price.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What might cause a severe contango in the market?
A stable market condition.
A perceived future shortage.
A sudden increase in demand.
A decrease in storage costs.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How is severe contango generally perceived in terms of market signals?
As a bearish signal.
As a neutral signal.
As an irrelevant signal.
As a bullish signal.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why is severe contango considered bearish for future prices?
It reflects stable market conditions.
It shows a lack of market activity.
It suggests a current market surplus.
It indicates a future shortage.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What action might traders take in a severe contango situation?
Sell commodities immediately.
Buy commodities for future sale.
Avoid trading altogether.
Only trade in the spot market.
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