As inventories of a commodity decline,which of the following is true?
A) The one-year futures price as a percentage of the spot price increases
B) The one-year futures price as a percentage of the spot price decreases
C) The one-year futures price as a percentage of the spot price stays the same
D) Any of the above can happen

Question

Quizplus · Accepted Answer

When inventories decline,the convenience yield increases and the futures price as a percentage of the spot price declines.

As Inventories of a Commodity Decline,which of the Following Is