Alternative Investments Q30
0. Which of the following is most likely to be correct for commodities?
- A
Investors deal in commodity derivatives because holding commodities in physical form incurs costs for transportation and storage.
- B
Commodity derivatives are attractive because of potential profits, but are not effective hedges against inflation.
- C
Commodity derivatives can only be traded on exchanges and include obligations.
- Option : A
- Explanation : B is incorrect because commodity derivatives are effective hedges against inflation. C is incorrect because commodity derivatives can be traded over the counter. Furthermore, commodity derivatives include options and swaps.
