Commodity Trading

Given below are some of the important interview questions on Commodity Trading prepared by experts to help you for the upcoming job interview.

Q.1 In Case Of Commodity Market what Is NCDEX Rain?
NCDEX RAIN in the Commodity Market is a rainfall index of NCDEX giving the Percentage of cumulative normal expected rainfall it has actually rained taking into consideration average actual rainfall at both: Colaba and Santa Cruz weather stations in Mumbai.
Q.2 What Is MCX In the Commodity Market?
Multi Commodity Exchange of India, it's a demutualised online commodity exchange of India which is Promoted by Financial Technologies (I) Ltd, SBI, Fidelity International, NSE, NABARD, HDFC Bk, SBI Life Insurance Co., Union Bank of India, Canara Bk, Bank of India, Bank of Baroda and Corporation Bank.
Q.3 Please explain what is Freightex In Commodity Market?
In the commodity market FRIGHTEX is an index on NCDEX representing simple average of the freight rates per tonne across high-density routes for a distance of 1000 kilometres.
Q.4 Would you invest In Commodities, if yes then why?
Yes, because it has Transparency and Fair Price Discovery: Trading in commodity futures is transparent and a process of fair price discovery is ensured through large-scale participation. Through the large participation views and expectations are also reflected of a wider section of people who are concerned with that commodity. Online Platform: for price risk management Producers, traders and processors, exporters/importers get an online platform through MCX / NCDEX.
Q.5 Do you know what is NAFED in the Commodity Market is?
The National Agricultural Cooperative Marketing Federation of India Ltd is abbreviated as NAFED, it is an apex organization of marketing cooperatives for agricultural produce in India, under the Ministry of Agriculture, Government of India.
It was founded back in October 1958 with the vision to Promote the trade of agricultural produce and forest resources across the nation.
And now if you see NAFED is one of the largest procurement as well as marketing agencies for agricultural products in India. With its headquarters in New Delhi, NAFED as four regional of Source.
Q.6 Can you explain what is National Commodity And Derivative Exchange Of India?
National Commodity and Derivative Exchange of India, it is a demutualised online commodity exchange of India , and it's Promoted by NSE, ICICI Bk, LIC, PNB, CRISIL, NABARD IFFCO and Canara Bank.
Q.7 What Is MSP In Commodity Market?
MSP in commodity market means Minimum Support Prices. To insure agricultural producers against any sharp fall in farm prices, Minimum Support Price (MSP) is a form of market intervention by the Government of India.
On the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) the minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops. MSP it's is price fixed by Government of India to protect the producer.
Q.8 What Is Assayer In Commodity Market?
In commodity market (person/institution) Assayer is an authorized entity that certifies and grades the commodities which are delivered in exchange accredited warehouses.
Q.9 What does Bullion denotes in the Commodity Market?
In the Commodity Market Bullion is the generic word for gold and silver.
Q.10 What Is Beneficiary Account?
It is a Demat account in the name of an Individual (single or jointly). It is similar to a bank account. Also, such accounts could also be in the name of a partnership firm, a Corporate, a society and a trust.
Therefore this account is to be used for transacting in commodity balances held by the account holder at Exchange accredited warehouses. These commodity balances would have been - in a physical process set up - represented through a warehouse receipt.
Q.11 Please give some information on OCEIL.
Online Commodity Exchange India Ltd. is abbreviated as 'Oceil,' it's a national multi-commodity exchange located at Ahmedabad.
The status of National Multi-commodity Exchanges is given to the Online Commodity Exchange India Ltd. (OCEIL), Ahmedabad, and the National Board of Trade (NBOT), Indore. While the NBOT had been trading in future contracts mainly in the Soya complex, the OCEIL is trading in the entire edible oil complex.
Q.12 Please explain what do you mean by private equity transactions?
In particular target companies when private equity firms make investments, it is referred as private equity transaction. A target company is an enterprise having the Potential to perform in the short period of time.
Q.13 In the equity trading what are two types of orders issuers may issues?
The basic types of orders issuer’s issues in equity trading are Buy Orders Sell Orders
Q.14 Can you judge whether the stock is expensive by just looking at its price?
No, just by Looking at its price you cannot judge the stock price, if the company’s earnings prospects are high enough a $200 stock can be cheap, while if earning potential is low a $10 stock can be expensive. While, the P/E ratio is the correct judge of the valuation of the stock.
Q.15 What is call option?
Call option is a right of the shareholder and it's not an obligation to purchase share at a specified price and a specified date in future.
Q.16 What charges are payable when purchasing a stock?
There are four payable charges, while purchasing a stock:
Stock Brokers
Commission
Stamp duty
Cost of the stock
Q.17 Please mention what are certain measures for which you have to be ready for equity trading?
It is very important to spend time after researching and learning about trading, even when a broker is handling your equity account. What all it requires is: knowledge, discipline and time Ready to lose money, and if you are not ready for taking risks, then equity trading is not right for trading. While, if you're running into heavy losses or the market is not performing as expected than cut losses and stop for the day. Don’t be foolish enough to turn profits into losses. Consider selling some of your stocks and but mind not all of them.
Q.18 Explain what is Option trading?
It is a contract between the seller and buyer to buy or sell a one or more lot of underlying assets at a fixed price on or before the date of expiry of the contract.
Q.19 Explain how options are different than equities?
Options are derivatives which simply means their values is derived from the value of an underlying investment. Options are traded among institutional investors, professional traders, individual investors and securities market places. By Put or Call, option trade is defined. Option trading has the potential to limit an investor’s risk; it offers a known risk to buyers. Option buyer cannot lose money, more than the price of the option.
The Options have expiry date while the Regular equities can be held for indefinite time. Like regular equities, option does not have any Physical certificates. Owning an option does not mean right to ownership of any share or dividends of a company unless the option is exercised.
Q.20 What is the main advantage of derivative?
Prices reflect the perception of market participants about the future
Q.21 Where is NCDEX located in India?
Mumbai
Q.22 What is another name of short hedge?
selling hedge
Q.23 What are the disadvantages of hedging?
Following are some of the disadvantages of hedging. 1. Lack of Regulation 2. Lack of Transparency 3. High Fees
Q.24 Which commodity was first traded in India?
Cotton as a commodity was first traded in India.
Q.25 How many parties are involved in an OTC contract
There should be 2 parties required.
Q.26 What is offer price in Commodity Market?
In commodity market, offer price in commodity market is the lowest price at which a dealer is willing to sell a commodity.
Q.27 What is Closing price in Commodity Market?
Closing Price in the commodity market is the price at the end of the day's trading on a commodity market.
Q.28 What is GDP in Commodity Market?
GDP in commodity market refers to the Agricultural Gross Domestic Product.
Q.29 What is MCX in Commodity Market?
In India, Multi Commodity Exchange (MCX) is a demutualised online commodity exchange of India promoted by Financial Technologies (I) Ltd, SBI, Fidelity International, NSE, NABARD, HDFC Bk, SBI Life Insurance Co., Union Bank of India, Canara Bk, Bank of India, Bank of Baroda and Corporation Bank.
Q.30 What is CIF in Commodity Market?
In commodity market (CIF) Cost, Insurance & Freight which is basically the transaction cost of doing a commodity trading.
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