Passive investors are motivated to invest in commodities for which of the following reasons? a. Commodities add additional diversification to their portfolios. b. In periods of economic growth, investing in commodities can potentially add a substantial amount of return to a portfolio. c. Investing in commodities is a good hedge against deflation. d. Collateralized futures offer an effective means for the passive investor to gain exposure to commodities.
D?? btw wats the answer
Usually individual investors don’t invest in commodities by themselves, that was be super expensive, thus it’s hard to add diversification in their portfolios this way…collateralized futures are a way to do this I guess.
A seems right but what is wrong with B?
Passive investors are not looking for risky investments.
im going with C hedging against deflation …arent they hedges against inflation though?
A Collateralized futures doesn’t seem like a “passive” investment strategy. I would say that B is wrong as that is more of a speculative approach to commodity investment. C is wrong because commodities are a hedge against inflation, not deflation. That my reasoning at least. -Stillwagon
Commodities move with inflation, more inflation, higher the price of oil, corn, etc.
Yeap, must be A.
it is C, gold is an inflation hedge, etc
so, what is the correct answer ??
Answer is A as argued by amberpower and stillwagon.
Actually that makes me wrong. I would have said D. I thought investing in commodities could be too pricey for investors, oops.
sorry, it is A, i saw inflation in C, not deflation. go with A. secret sauce has some crap about this, and they mention inflation hedge. so keep that on the backburner too i guess they are trying to trick you with deflation/inflation.
amberpower, you said: > Passive investors are not looking for risky investments. this is why B is not correct. > Commodities move with inflation, more inflation, higher the price of oil, corn, etc. and thsi is why C is wrong. I didn’t notice your picked D.
a. correct, adds diversification. b. this is a pasive investor, doesn’t care mch about potential c. good tool against inflation, not deflation, who wants to fight deflation? d. this is not a motivation:))