Characteristics of Physical Commodities Investment

Easy Commodities Investment Physical Commodities

John is considering investing in physical commodities as part of his diversified portfolio. He is particularly interested in understanding the characteristics and risks associated with different types of physical commodities.

After researching, John learns about the relationship between supply and demand, storage costs, and market volatility in commodities. He wants to identify an example of a physical commodity that has distinct characteristics affecting its investment profile.

Which of the following is a primary characteristic of investing in physical commodities?

Physical commodities typically have lower volatility than financial securities.

Investors must consider significant storage costs for physical commodities.

Physical commodities generate regular cash flows like stocks do.

Hint

Submitted14.2K

Correct11.5K

% Correct81%