Answer: Maximizing backwardation

## Explanation **Maximizing backwardation** would most likely result in the highest return for commodity indexes. **Why backwardation maximizes returns:** - **Backwardation** occurs when futures prices are lower than spot prices - For long positions, this creates **positive roll yields** - When rolling contracts, you sell high and buy low - This generates additional returns beyond price appreciation **Why contango reduces returns:** - **Contango** occurs when futures prices are higher than spot prices - For long positions, this creates **negative roll yields** - When rolling contracts, you sell low and buy high - This reduces overall returns **Note:** Options B and C are identical in the text (both say "Maximizing backwardation"), but the correct principle is that maximizing backwardation leads to higher returns due to positive roll yields. Therefore, **B: Maximizing backwardation** (or C, which is identical) would most likely result in the highest return.

Author: LeetQuiz Editorial Team