Question

Q18. Consider the following statements:

1. A commodity derivatives market or exchange is a public marketplace where commodities are contracted for purchase or sale at an agreed price.

2. These purchases and sales are made under the terms and conditions of a standardized futures contract.

Which of the following statements are correct?

• A. a) 1 only
• B. b) 2 only
• C. c) Both 1 and 2
• D. d) None of the above

Answer 1

The correct option is A

a) 1 only

• A commodity derivatives market (or exchange) is, in simple terms, nothing more or less than a public marketplace where commodities are contracted for purchase or sale at an agreed price for delivery at a specified date.
• These purchases and sales, which must be made through a broker who is a member of an organized exchange, are made under the terms and conditions of a standardized futures contract.
• Commodity prices do vibrate more rapidly and provide profitable opportunities, accordingly recessions, depressions and booms offer many opportunities to scoop up profits.