study terms

Question 1

The price of a commodity for immediate delivery

Answer 1

Spot Price

Question 2

The immediate exchange of ownership of a commodity or good for an agreed-upon amount of money

Answer 2

Cash Trade

Question 3

A direct commitment negotiation between one buyer and one seller and if traded, the transaction would take place OTC and deemed illiquid.

Answer 3

Forward Contracts

Question 4

A person participating in the physical commodity who also holds positions in futures and/or options in order to be protected from the risk of unfavorable price movements

Answer 4

Hedger

Question 5

The specific exchange where the particular commodity futures contract is traded

Answer 5

Contract market

Question 6

The customer wants to buy or sell immediately at the best price available (customer specifies the Futures and order size only), and execution is certain.

Answer 6

Market Order

Question 7

The customer only wants to buy or sell at a set price or better (customer specifies the Futures, size, and price), and execution is uncertain.

Answer 7

Limit or Resting Order

Question 8

A type of contingent order which are triggered (activated) by the market trading at or through the stop price

Answer 8

Stop Order

Question 9

In this type of order, the broker is given full discretion as to time and price for executing orders. The broker cannot be held responsible for any action it takes or fails to take.

Answer 9

Not Held (NH) Order

Question 10

In this type of order, the order is entered on the market side

Question 11

In this type of order, the broker is instructed to do one of two alternative orders and whichever one is done first automatically cancels the other (this prevents a double fill)

Answer 11

One Cancels Other (OCO)

Question 12

In this type of order, one FCM “gives up” orders to other FCMs to protect the client’s anonymity and the FCMs share commissions

Answer 12

Give Up

Question 13

In this type of order, which is sometimes referred to as a “liquidate and roll” order, the existing position is liquidated in a near month (used by speculators prior to the first notice day) and re-establish position to a later delivery month

Answer 13

Switch

Question 14

Excess equity can be used for margin on new positions which is referred to as:

Answer 14

Pyramiding

Question 15

The purchase and sale of the same commodity, on the same exchange, but in different expiration months is called a(n):

Answer 15

Intramarket or Interdelivery Spread

Question 16

The purchase and sale of the same commodity on different exchanges is called a(n):

Answer 16

Intermarket Spread

Question 17

The purchase and sale of different commodities is called a(n):

Answer 17

Intercommodity Spread

Question 18

Businesses that either currently possess or will produce the commodity for sale and delivery at some future date are called:

Answer 18

Producers

Question 19

Those that are currently without the commodity but have an absolute use for the commodity and will need to buy at some future date are called:

Answer 19

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