If the spot price for a commodity is lower than the forward price, the market is said to be in:

If the spot price for a commodity is lower than the forward price, the market is said to be in:
A . contango
B . backwardation
C . a short squeeze
D . disequilibrium

View Answer

Answer: A

Explanation:

When the forward prices are greater than the spot prices, the market is said to be in contango. When forward prices are lower than spot prices, the market is said to be backwarded. A short squeeze may contribute to backwardation. Choice ‘a’ is the correct answer.