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Commodities and Commodity Derivatives, Geman

FRM prior Commodities and Commodity Derivatives, Geman 2016-06-28

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Chapter 1 was previously assigned, with the following LOs:
  • Define the major risks involved with commodity spot transactions.
  • Differentiate between ordinary and extraordinary transportation risks.
  • Explain the major differences between spot, forward, and futures transactions, markets, and contracts.
  • Describe the basic characteristics and differences between hedgers, speculators, and arbitrageurs.
  • Describe an “arbitrage portfolio” and explain the conditions for a market to be arbitrage-free.
  • Describe the structure of the futures market.
  • Define basis risk and the variance of the basis.
  • Assess the effectiveness of hedging a spot position with a specific futures contract, and compute and compare the effectiveness of different potential alternatives in hedging.
  • Define and differentiate between an Exchange for Physical agreement and an Alternative Delivery Procedure.
  • Explain how volume and open interest relate to liquidity and market depth.
David Harper CFA FRM
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Simply awesome - David - Thanks a tonne!