APS 102-M3L1 (quiz)

Agricultural commodity exchanges are not typically associated with efficient and sophisticated markets, providing valuable benefits such as price discovery, publicly available market information, contracts for minimizing price risks, low transaction costs of exchange, and insurance against potential opportunistic behavior of trading partners

• True

• False

• Maybe

• Not to mention

A goods and financial market where different groups of participants trade commodities and commodity-linked contracts.

• Commodity

• Commodity exchange

• Goods

• Product

What is a commodity exchange (CE)?

• Exchange is an entity, usually an incorporated non-profit association, which determines and enforces rules and procedures for the trading of commodities and related investments, such as commodity futures

• Refers to the physical center where trading takes place.

• A and B

• Buyer and sellers exchange contract but not the actual product

An association, company, or any legal corporate body which provides an organized marketplace for trading in commodities.

• Commodity market

• Goods and Services

• Physical Facilities

• Commodity exchange

It is a place where physical or virtual area  where commodity trading occurs.

• Commodity restrictions

• Commodity Exchange

• Commodity market

• Trading

It begin with the trading of agricultural products, such as corn, cattle, wheat and pigs in the 19th century.

• Native market

• Modern market

• Contractor A

• All of the above

The main characteristic of commodities is that they are not  interchangeable with other goods from different group.

• True

• False

• Not to mention

• Both A and C

What are the two ways on how commodities can be traded?

• Trading in the spot market; this means that the commodities are exchanged immediately when setting a deal, either for cash or other goods. The price is set according to the current market prices and delivery occurs immediately or a few days later.

• Trading in the form of futures contract; which means that the buyer and seller instead of goods, exchange the contract which obligates them to buy or sell the commodity on a specific date in the future and at a particular price.

• They can provide valuable public information such as prices and volumes of trade

• Both A and B

What are the problems of commodity exchange that need to be addressed?

• High Production and Marketing Costs , Constrained Access to Credit

• Limited Availability of New Farm Technology, Price Volatility

• Farmers’ Market Access Conditions, Ancillary Market Institutions and Services Required of a Commodity Exchange

• All of the above

A market that has cash transactions between two parties without the use of an exchange.

• Spot Market

• Product

• Market Place

• All of the choices