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Tuesday, December 20, 2011

Commodity Market Quiz - 3

1. A trader sells 30 units of gold futures at Rs.6500 per 10 grms. What is the value of his open short position? Unit of trading is 100 gms and delivery unit is one Kg.
[A]Rs.1,95,000
[B]Rs.19,50,000
[C]Rs.195,00,000
[D]Rs.19,500



2. On the 15th of June a firm involved in industrial fabrication knows that it will require 30000 kgs of silver on August 15 to meet a certain contract. The spot price of silver is Rs.1680 per kg and the August silver futures price is Rs.1730. A unit of trading is 5 Kgs and the delivery unit is 30 Kgs. The fabricator can hedge his position by _____________________________.
[A]Buying 1000 units of August silver futures
[B]Buying 6000 units of August silver futures
[C]Selling 6000 units of August silver futures
[D]Selling 1000 units of August silver futures



3. Members can opt to meet the security deposit requirement by way of ______________.
[A]Bank guarantee
[B]Cash
[C]Fixed deposit receipts
[D]All of the above



4. An option gives the _________ the right to do something.
[A]Seller
[B]Exchange
[C]Clearing house
[D]Buyer



5. Which of the following cannot form the underlying for a commodity derivative contract?
[A]Nifty
[B]Cotton
[C]Silver
[D]Wheat



6. ____________ is the closing price of the underlying commodity on the last trading day of the futures contract.
[A]Market price
[B]Final settlement price
[C]Auction price
[D]Daily settlement price



7. A trading member has proprietary and client positions in April gold futures contract. On his proprietary account, he sold 3000 trading units at Rs.6000 per 10 gms. On account of client A, he bought 2000 trading units at Rs.6012 per 10 gms and sold 1500 units at Rs.6020 per 10 gms, and on account of client B, he sold 2000 trading units at Rs.5990 per 10 gms. What is the outstanding position on which he would be margined?
[A]5500
[B]7500
[C]6000
[D]3000



8. The __________ market reflects the price of domestically crushed soybean.
[A]Ahmedabad
[B]Delhi
[C]Mumbai
[D]Indore



9. A trading member has proprietary and client positions in a March cotton futures contract. On his proprietary account, he bought 5000 trading units at Rs.6000 per Quintal and sold 2500 at Rs.6015 per Quintal. On account of client A, he sold 2000 trading units at Rs.6012 per Quintal, and on account of client B, he bought 1000 trading units at Rs.5990 per Quintal. What is the outstanding position on which he would be margined?
[A]8500
[B]4500
[C]9500
[D]5500



10. A company knows that it will require 33,000 bales of cotton in three months. The hedge ratio works out to be 0.85. The unit of trading is 11 bales and the delivery unit for cotton on the NCDEX is 55 bales. The company can obtain a hedge by _______________________.
[A]Buying 2550 units of three-month cotton futures
[B]Selling 600 units of three-month cotton futures.
[C]Buying 600 units of three-month cotton futures.
[D]Selling 2550 units of three-month cotton futures



11. Prices in an organised derivatives market reflect the perception of market participants about the ____________________.
[A]Present
[B]Variability of spot prices
[C]Future
[D]Past



12. There would be liability for payment of sales tax when ______________.
[A]The contract is settled in the same state as the exchange
[B]The contract is settled in a state other than the state where the exchange is located.
[C]The contract is settled in a state other than the state where the buyer is located.
[D]The futures contract fructifies into a sale and culminates into delivery



13. It is the responsibility of the __________constituent to comply with the relevant local state sales tax laws and other local enactments.
[A]Selling and buying
[B]Clearing house
[C]Buying
[D]Selling



14. The amount that must be deposited in the margin account at the time a futures contract is first entered into is known as _____________.
[A]MTM margin
[B]Initial margin
[C]Security deposit
[D]Collateral



15. In order to prevent erroneous order entry by trading members, operating price ranges on the NCDEX are kept at _____from the base price.
[A]+/- 16%
[B]+/- 10%
[C]+/- 8%
[D]+/-20%



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