which of the following commodities represent a better inflation hedge? A. Energy B. Livestock C. Industrial Metal please be sure to explain why you chose a particular answer for my benefit :).
Energy
Apologies, storable commodities directly linked to the level of economic activity provide a hedge against unexpected inflation
A, energy has the highest sensitivity. Industrial metals are second.
energy…storable commodoties related to production such as energy and to a lesser exteent precious industrial metals
a good one it is said that agricultural and not storable commodities do not provide a good inflation hedge, that correlation is even negative with inflation Thus, it should be C BUT I remember something about energy and it has an even stronger correlation, so it is A (V5, p 57)
soddy1979 Wrote: ------------------------------------------------------- > Apologies, storable commodities directly linked to > the level of economic activity provide a hedge > against unexpected inflation Exactly! If the storable commodities represent good hedge against the inflation, then why not industrial metal? As Paraguay hinted, the answer can be either one of them. Is there anything in the question that we should look for to know the exact answer for this type of questions where more than one can be an answer?
Energy has the highest correlation. The book discussed the GSCI if memory serves me correct. It’s a crapshoot, but you are going to get some wrong, I wouldn’t worry too much.
A
A 0.46 correlation