Commodity Dealing

Which of the following can be the underlying for a commodity derivative contract?

• (a) Interest Rate
• (b) Euro-Indian Rupee
• (c) Gold
• (d) NIFTY

Daily mark to market settlement is done ______________________.

• (a) Till the date of contract expiry
• (b) As long as the contract makes a loss
• (c) On the last day of week
• (d) On the last trading day of the month

___________ work at making profits by taking advantage of discrepancy between prices of the same product across different markets.

• (a) Arbitragers
• (b) Speculators
• (c) Exchange
• (d) Hedgers

A forward contract is an agreement between two entities to buy or sell the underlying asset at a future date, at today's pre- agreed price.

• (a) FALSE
• (b) TRUE

Commodity exchanges enable producers and consumer to hedge their _______ given the uncertainty of the future.

• (a) seasonal risk
• (b) profit risk
• (c) production risk
• (d) price risk

Which of the following Exchange does not offer derivative trading in Soybean?

• (a) LME
• (b) NCDEX
• (c) CBOT
• (d) MCX

_________ is the last day on which the futures contract will be traded, at the end of which it will cease to exist.

• (a) Redemption Date
• (b) Expiry Date
• (c) Exercise Date
• (d) Maturity Date

A _______option gives the holder the right but not the obligation to buy an asset by a certain date for a certain price.

• (a) Put
• (b) ITM
• (c) OTM
• (d) Call

Forward contracts are bilateral contracts and hence exposed to counter party risk.

• (a) FALSE
• (b) TRUE

An ________ option is an option that would lead to a zero cash flow to the holder if it were exercised immediately.

• (a) In the money
• (b) At the money
• (c) Out of the money
• (d) Put