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Business Fashion Practices > Commodities Markets > Flashcards

Commodities Markets Flashcards

1
Q

Commodities market

A

where the value of tangible goods are traded

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2
Q

Commodities include:

A
  • Metals
  • Oil
  • Agricultural products
  • Chemical
  • Lumber
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3
Q

Discretionary income

A

is the amount of money remaining after paying for essentials (rent, foods, taxes and utilities)

  • If the cost of commodities increases the customer will have less discretionary income to spend
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4
Q

What type of income does the fashion indsutry rely on

A

discretionary income

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5
Q

Metals (type of commodity)

A

Metals have manufacturing, industrial and medical applications, they include:

  • Gold
  • Silver
  • Platinum
  • Aluminium
  • Copper
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6
Q

Oil (type of commodity)

What fabric comes form crude oil?

A

As the price of crude escalates the price of basic materials will escalate

Crude oil is refined into gas (petrol)  Polyester is derived from crude oil

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7
Q

Gas (type of commodity)

A

Higher prices affect cost of transporting the goods, they affect the customers discretionary income

  • Travel plans become more expensive
  • People look fir alternative transportation
  • The price of gas does not affect airplane prices as they use different fuel
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8
Q

Agricultural commodities

A
  • They are affected by weather and disease
  • Traded on a worldwide basis so this can often balance out regional issues
  • Increases in price of food can decrease discretionary income
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9
Q

Examples of agricultural commodities

A
  • Oranges
  • Corn
  • Wheat
  • Coffee
  • Cotton
  • Wool
  • Boy beans
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10
Q

Other commodities

  • Rubber
  • Lumber
  • Chemicals
A
  • Has a direct impact on shoes and other accessories
  • Affect the price of housing and furniture
  • There are a variety of chemicals that are essential to the production of fabric and more
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11
Q

The commodities business

A
  • All commodities are traded
  • Businesses can make contracts with people for the future so that if the price suddenly goes up they aren’t that affected, they can now control costs.
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12
Q

Options

A

contracts brought for a future date

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13
Q

Who determines oil prices

A

OPEC

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14
Q

Derivatives

A

a contract between two parties which derives its value/price from an underlying asset

The value of the derivative is based on the future value of the commodity

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15
Q

What is the simplest form of a derivative

A

The future commodity option – is the simplest form for derivative

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16
Q

How are commodities traded?

A
  • Commodities have a direct impact on the cost of living

- All commodities are traded on a international basis

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17
Q

Gold

What is it an indicator of?
When do investors buy it?

A

A major indicator of economic stability

  • Investors buy gold in times of economic uncertainty
18
Q
  • Gold, platinum and silver affect the price of jewellery
  • Lumber affects the prices of. New houses
  • Cotton affects the price of fabric
  • Oil, is a major component of polyester
  • Fuel, heating and food prices affect discretionary income
  • Higher fuel prices affect the cost of transportation
A

-

19
Q

Foreign exchange

A

the trade of world currencies:

20
Q

Spot trades

A

are usually two day trades at the current value of the currency

21
Q

Future trades

A

are contracts to buy a currency at agreed price at a later date

22
Q

Swaps

A

are an exchange of currency between traders that is revised on a agreed date

23
Q

Each nation has two types of currency:

A

1) Domestic currency

2) Foreign currency

24
Q

Domestic dollar

A

is the actual money the citizenry uses to purchase goods and services

  • Prices in the domestic dollar are expected to all allow the citizen to meet basic needs
  • Occasionally goods are priced out of the consumer market, normally due to inflation from shortages
25
Q

The Foreign dollar

A

Impacted by the balance of trade

26
Q

Hard currencies

A

are trades: Euro, Dollar, Pound, which is based on their economic stability

27
Q

Secondary currencies

A

peso, rand and rupee, their economies aren’t as strong

28
Q

Foreign exchange

A

trading ones domestic currency for the local currency

When a country’s currency is devalued, tourists are attracted to that country

29
Q

What are market indicators used for?

A
  • Used to assess the economic health of a nation
  • They look at a variety of indicators
  • Indicators reflect activity in many business sectors
30
Q

Consumerism

A

(people buying things) – an important part of the market performance and is reflected in the GDP

31
Q

List some market indicatord

A 
 Interest rates 
 Gross domestic product 
 Index of durable goods 
 Consumer price index (CPI)
 New housing starts / sale of existing homes 
 Consumer confidence index 
 Unemployment figures 
 Financial market indicators
32
Q

Interest rates

A
  • Determined by the federal reserve bank
  • Higher interest rates lower / slower economic growth, reduce cooperate spending but it can also create further inflation
  • The federal reserve uses interest rates to stimulate the economy
33
Q

Gross domestic product

A

total monetary value of all the goods and services a country produces

  • Reported quarterly
  • Includes consumer spending
34
Q

Real GDP

A

is when the GDP is adjusted for inflation of goods and services

35
Q

Index of durable goods

A
  • Reflects cost of machinery used for production of goods and services
  • Higher index an foreshadow a slow down or cooperate expansion
  • Last industry to leave the US
36
Q

Consumer price index (CPI)

A

the price of a weighted average market basket of consumer goods and services purchased by households (shopping basket)

  • Reported regionally
37
Q

New housing starts / sale of existing homes

A
  • Rise in index increases dollars spent for home furnishings
  • Reduce dollars available for clothing
  • Reflects strength of economy because people move when they have money and loans available
38
Q

Consumer confidence index

A
  • Analyses the attitudes of 500 US households based on savings and spending trends
  • Measures the optimism on the state of the current and future economy
  • Done quarterly
39
Q

Unemployment figures

A
  • Reported quarterly and yearly by sector

- Critical reflection of the growth of the economy

40
Q

Financial market indicators

A
  • Measure the performance of the stock market and assess relative value

Business Fashion Practices (12 decks)

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