Futures

Based on your learning in Class #2 and Class #3, explain the following concepts using your own words and examples:

1. “Speculators should long futures contracts on copper when the spot and futures prices of copper show Backwardation”  True or False???

Please explain your answer with example(s). (Hint: review Class #2 presentation, section 6, p. 21; and review Class #3 presentation, section 2, p. 6)

2. “Futures price of Cocoa is $2160. Futures price of Coffee is $0.93. As such, Futures on Cocoa are more risky than Futures on Coffee to trade.” True or False???

 

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