Why can commodity benchmarks not use a market-cap method of weighting? A) They can, and it’s the most frequently used B) Because the industries are not considered investable C) Because commodity futures are a zero-sum game D) The dynamic nature of contracts makes computation prohibitively difficult
D?
Good question. Thanks man. I think I will go with D, but C is also attractive. EDIT: Can I change? Now I choose C, because Schweser says that. Book 4 page 17.
answer please
Boris gave it to you above.
C … futures are a zero sum game
Sry man for answering your question for you. 
So can I say, since all derivatives are zero sum, market-cap method is off for all of them? Hedge funds with market neutral strategy is off as well? skillionaire Wrote: ------------------------------------------------------- > Boris gave it to you above.
yeah market cap method cant work for any derivative because they are a zero sum game. The market capitalization would always be zero. Not sure about hedge funds, because they are not a zero-sum game.
i understand that derivatives are zero sum game. But the text also said “Most of them assume a futures-based strategy, Fox example, DJ-UBSCI and S&PCI represent returns associated with passive long positions in futures” So could there be a market-cap index, that include market cap of long contracts only?
It’s C. For sure.