Observation

Candidates who attempted the question did not performance well. Apparently, they do know what a commodity market is.

The expected responses to the question include:

(a) A stock market is an organized market for the sale and purchase of securities while a commodity market is an organization that provides facilities and arrangements for the buying and selling of tradeable commodities.        

                                                          
(b) Metals sold in a commodity exchange

1. Gold
2. Silver
3. Copper
4. Platinum
5. Steel
6. Iron
7. Lead
8. Nickel
9. Zinc
10. Aluminium

          (c)     Benefits of the commodity exchange

1. It provides opportunity to contain risks of future adverse movements in price.
2. Through centralized information provided by the exchange, prices of commodities are known, and this reduces haggling or cheating by middlemen.
3. Producers are assured of regular, undisrupted product demand as the exchange enforces compliance with contracts entered.
4. It provides storage facilities and thus helps preserve products before their sale.
5. It assures that high quality products are traded through the exchanges’ grading and standardization of products mechanism.
6. It provides employment opportunities for many people as brokers and warehouse operators.
7. It provides access to and competitiveness in international markets for tradeable commodities.
8. It leads to expansion in the size of the market for commodities compared to the size for trading through the traditional markets. It leads to increase in the production of agricultural goods.