Answer: Normal backwardation

An inverted futures market is characterized by **backwardation**, where futures prices are below the spot price and the curve slopes downward with maturity. - **A** is true: backwardation describes an inverted market. - **C** is true: if \(F(0) < S(0)\), the futures price is below spot. - **D** is true: if a longer-dated futures price is below a shorter-dated one, the curve is inverted. - **B** is the exception in this context because **normal backwardation** is not the cleanest curve-shape description for an inverted market; it is a separate term and is not the best direct characterization here. So the best answer is **B**.

Author: Manit Arora