🔥 Daily ChallengeISEManaged and other productsMedium
A pension fund's commodities manager reports a positive roll yield for the quarter despite a flat spot market. What market condition most likely enabled this result?
6 attempts · 0% correct
The futures price is lower than the current spot price.Correct
The collateral yield exceeds the spot price return.
The futures price is higher than the current spot price.
The spot price of the commodity is consistently declining.
Why
In backwardation, the futures price is lower than the spot price, allowing the manager to buy cheaper contracts to replace expiring ones.
