Q17. Consider the following statements about Commodity market:
1. It is the market where a wide range of products are traded
2. This would help investors hedge their commodity risk.
Which of the following statements are correct?
Q17. Consider the following statements about Commodity market:
1. It is the market where a wide range of products are traded
2. This would help investors hedge their commodity risk.
Which of the following statements are correct?
The correct option is C c) Both 1 and 2
Commodity market is an important constituent of the financial markets of any country. It is the market where a wide range of products, viz., precious metals, base metals, crude oil, energy and soft commodities like palm oil, coffee etc. are traded.
It is important to develop a vibrant, active and liquid commodity market. This would help investors hedge their commodity risk, take speculative positions in commodities and exploit arbitrage opportunities in the market.
Derivatives as a tool for managing risk first originated in the commodities markets. They were then found useful as a hedging tool in financial markets as well.
c) Both 1 and 2
Commodity market is an important constituent of the financial markets of any country. It is the market where a wide range of products, viz., precious metals, base metals, crude oil, energy and soft commodities like palm oil, coffee etc. are traded.
It is important to develop a vibrant, active and liquid commodity market. This would help investors hedge their commodity risk, take speculative positions in commodities and exploit arbitrage opportunities in the market.
Derivatives as a tool for managing risk first originated in the commodities markets. They were then found useful as a hedging tool in financial markets as well.
