Commodity Derivatives Certification Free Demo Test 2

Explanation:

The above question implies that if the oil content in castor seed is below 47 percent but within 45 percent,
the contracted price will attract discount. For every 1 percent decrease in oil content or part thereof, there will be a discount of 2 percent or part thereof in price.

Contracted price of castor seeds i.e., Rs 6000 will be discounted by 2 percent because the quality content has decreased by 1 percent (from 47 percent to 46 percent).

Contracted price of castor seeds (at discount) = 6000 – 2% of 6000 = 6000 – 120 = Rs. 5880

Explanation:

Exchange traded commodity markets facilitates efficient price discovery as the market brings together buyers and sellers of divergent needs in a transparent online system.

Explanation:

Trading cum Clearing Member (TCM): This category of membership entitles a member to execute trades on his own account as well as for his clients and also to clear and settle trades executed by himself as well as of his clients.

Clearing members are members of the clearing corporation. They carry out risk management activities and confirmation/inquiry of trades through the trading system.

Explanation:

On a Screen based computerised trading system, the order matching is done on a price-time priority basis. This means that all the orders received are sorted on ‘best-price’ basis

A Member is permitted to modify or cancel his orders. The order can be modified by effecting changes in the order input parameters. Time priority for an order modification will not change due to decrease in its quantity or decrease in disclosed quantity. In other circumstances, the time priority of the order will change.

Explanation:

Self Clearing Members (SCM) / Trading cum Clearing Member (TCM): This category of membership entitles a member to execute trades on his own account as well as for his clients and also to clear and settle trades executed by himself as well as of his clients.

Clearing members are members of the clearing corporation. They carry out risk management activities and
confirmation/inquiry of trades through the trading system.

Explanation:

In a Mandi, the farmers bring their produce, and the traders or middlemen known as commission agents inspect the quality and bid for the same. The buyer with the highest bid acquires the produce.

Thus mandis are physical spot markets in which the commodities are physically bought and sold by the buyers and sellers respectively for immediate delivery.

Explanation:

The Securities Contract (Regulation) Act, 1956 (SCRA) gives SEBI the jurisdiction over stock exchanges through recognition and supervision. It also gives SEBI the jurisdiction over contracts in securities and listing of securities on stock exchanges.

Explanation:

If a trader is expecting a large decrease in volatility, he will try to gain from it by selling a call and a put with same expiry dates but with different strike prices. This is known as Short Strangle.

Explanation:

Speculation is a practice of engaging in trading to make quick profits from fluctuations in prices.

Long speculators are those who buy first and expect the price to increase from current level.
Short speculators are those who sell first and expect the price to decrease from current level.

Explanation:

A Trading Member can trade either on their own account or on behalf of the clients. This category of membership entitles a member to execute trades on his own account as well as for clients registered with him.