Observation

Most candidates could not explain commodity exchange. Some candidates were even explaining stock exchange. Most candidates could not list the tradable commodities.

The expected responses to the question include:

         4.       (a)      A commodity exchange is a market that provides arrangements                                    and facilities for buying and selling of tradable commodities.                                                                                                
(b)     Tradable commodities in the commodity exchange include:

1. Grains;
2. Fibre;
3. Cassava;      
4. Livestock/meat;
5. Cocoa;
6. Crude petroleum;
7. Gas;
8. Gold;
9. Silver;
10. Zinc;
11. Platinum;
12. Iron;
13. Cotton;
14. Coffee;
15. Groundnut;
16. Palm produce.

                   (c)      The functions of a commodity exchange are:

1. It provides opportunity to hedge against risks of adverse future   

        price fluctuations;   

1. Producers and users have better and easier access to market

        information   which reduces their vulnerability to cheating by middlemen and buyers;

1. It gives assurance of regular and uninterrupted product

        demand/regular market;
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1. It provides a convenient place where members meet and transact           business according to  establish rules and regulations;
2. It enhances expansion and improvement in warehousing facilities;
3. quality assurance- they ensure high quality of goods traded by

          getting dealers to comply with set standards and grades;

1. It provides access to commodities in international market and this promote competitiveness/ increase in total world output;
2. It provides a platform for the settlement of disputes among members/arbitration;
3. It provides producers opportunities to transfer their risks to

          professional risk bearer.