1) If the current date is July 18, 2024, which lumber futures contract will most likely have the highest liquidity?

Expiration in August 2024

Expiration in February 2026

Expiration in July 2024

Expiration in October 2025

2)

Assume an unnamed asset has a spot price of $1,000. The asset generates a 3.4% income return, costs 1.5% to finance, and 2% to transport, warehouse and insure. What is most likely to be true about this asset?

The market is in backwardation

The futures price is equal to $1,005

The market is in contango

The futures price is equal to 999

3)

If an investor wants to hedge 1,400,000 barrels of WTI crude oil, what is the simple hedge ratio if the unit of trading is 1000 barrels?

140

14,000

1,000

1,400

4)

Which line best represents a contango market?

A

Spot price

B

C