Tiêu đề Alternative investment.pdf ✅

Last Revised: 08/14/2023 2 Introduction to Commodities and Commodity Derivatives a. compare characteristics of commodity sectors b. compare the life cycle of commodity sectors from production through trading or consumption c. contrast the valuation of commodities with the valuation of equities and bonds d. describe types of participants in commodity futures markets e. analyze the relationship between spot prices and futures prices in markets in contango and markets in backwardation f. compare theories of commodity futures returns g. describe, calculate, and interpret the components of total return for a fully collateralized commodity futures contract h. contrast roll return in markets in contango and markets in backwardation i. describe how commodity swaps are used to obtain or modify exposure to commodities j. describe how the construction of commodity indexes affects index returns M.M134813896.
Last Revised: 08/14/2023 3 Commodities ⇒ Commodity – a physical good attributable to a natural resource that is tradeable and supplied without substantial differentiation by the general public - trade in physical (spot) & futures/forward markets - potential for diversification benefits in a multi-asset class portfolio due to low (historically) correlation w/ bonds & stocks (some possible inflation hedging benefits) - derive their value Sectors/ as per Thompson Reuters/Core Commodity CRB Index · Energy · Industrial (base) metals · Livestock · Grains · Precious Metals · Softs (cash crops) 1. Energy – most economically valuable sector 1) Crude Oil – must be refined to be useful - different grades (trade at varied prices) from use as a consumable as inputs to the production process Brent – North Sea WTI – US Bonny Light – Nigeria Mayan Crude – Mexico Page 1 LOS a - compare Page 2 LOS a - compare M.M134813896.
Last Revised: 08/14/2023 4 1. Energy 1) Crude Oil – low in density & flows freely at room temperature ⇒ Light - easier to process, yielding more valuable gasoline & diesel - low in sulfur content ⇒ Sweet - weather ➞ temporary impact (e.g. hurricane) · as economies grow, oil demand increases (availability of oil at affordable prices also facilitates growth) · drivers of supply & demand e.g./ shale oil – supply availability due to extraction technology electric vehicles, solar – reduce demand for oil products US & Canada – ban offshore drilling in Artic waters 1. Energy 2) Natural Gas – can be used directly (heavier compounds – NGLs – are also extracted liquids - categorized as either: a) associated gas – coming from an oil well (a co-product of oil) can be: - sold in spot markets - burned off - re-injected into the oil field to maintain pressure (keeps extraction costs low) b) unassociated gas – on its own (where oil is not present) - Storage/transportation cost high ➞ need to keep gas under pressure - liquified natural gas (LNG) – for transport by ships - must be cooled to -260°F - primary demand – electric generation - also weather dependent technology politics business cycle extraction refining usage cooling heating Page 3 LOS a - compare Page 4 LOS a - compare M.M134813896.