About Salman Khan

Salman Khan is the Founder, Executive Director, and Faculty of the Khan Academy, whose mission is to provide a free world-class education to anyone, anywhere. He has worked for both hedge funds and Fortune 500 companies and holds an MBA from Harvard Business School, where he was the president of his class. He also attended MIT, where he received three degrees: a Masters in Electrical Engineering & Computer Science, a B.S. in Electrical Engineering & Computer Science, and a B.S. in Mathematics.

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About CNBC Explains

CNBC Explains dissects the complicated economics of our world — everything from stocks and corporate balance sheets, to international trade and government policy. We are pleased to feature the work of Salman Khan, founder of the Khan Academy, as well as the reporting of CNBC anchors and editors. Each short video explains a complex topic using a unique digital interface and easy-to-understand style that simplifies even the most arcane topics.

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Contango: CNBC Explains

Published: Thursday, 16 Jun 2011 | 8:59 AM ET

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By: CNBC Explains

Contango may seem daunting to those new to investing or unfamiliar with futures contracts, but it doesn’t have to be. Simply put, contango occurs in a market when futures prices for a commodity are greater than the current spot price. The idea is that, eventually, these prices will converge. Salman Khan of the Khan Academy illustrates.

From this video, you’ll understand:

What it means to say a market is “in contango”
The rationale behind contango and why you may see it in the market

From this video, you’ll understand:

What severe contango means and how traders take advantage
Whether severe contango is a bullish or bearish signal for individual commodities