Unit ko samjho · NISM Series XV
Fundamental analysis of commodities
9 questions is unit mein
Sawaal aur jawaab English mein hain, kyunki NISM ka exam paper bhi English mein hota hai.
Is unit mein kya hai
- A commodity's three-month futures price is above its spot price. Assuming the curve is upward sloping for comparable maturities, this market structure is called:
- A commodity's spot price is ₹8,200 per unit, while otherwise comparable futures prices decline with maturity and the three-month contract trades at ₹7,900. This curve is best described as:
- For a globally traded commodity quoted primarily in US dollars, a broad strengthening of the US dollar is commonly viewed, other things equal, as:
- An analyst is forecasting the near-term supply of a major seasonal crop. Which information set is most directly relevant?
- Exchange-monitored inventories of an industrial metal fall steadily for several months while consumption remains firm and new supply is constrained. What does this most reasonably suggest?
- A farmer expects to sell a crop after three months and is worried that the commodity price may fall before sale. Ignoring basis risk and contract-size mismatch, which futures hedge is directionally appropriate?
- A producer expects to sell 1,000 units of a commodity. Each futures contract represents 100 units. If the analyst chooses a hedge ratio of 0.8, how many futures contracts are required for the hedge?
- A commodity's international US-dollar price is unchanged, but the rupee depreciates materially against the dollar. Ignoring tariffs, freight and local basis changes, the commodity's rupee-denominated domestic price would tend to:
- A geopolitical event unexpectedly disrupts exports from a country that is a major global supplier of a commodity. If near-term demand is unchanged and replacement supply is limited, the most likely immediate fundamental effect is:
Zaroori ideas
Practice bank se · 1
A commodity's three-month futures price is above its spot price. Assuming the curve is upward sloping for comparable maturities, this market structure is called:
Contango describes a futures curve in which futures prices for later delivery are above the spot price or nearer maturities. It can be consistent with positive net cost of carry, although actual curves also reflect supply-demand conditions and convenience yield. Remember: Contango and backwardation describe the shape of the futures curve, not a guaranteed forecast of future spot prices.
Hint Common mistake: Assuming a futures price above spot necessarily means traders expect spot to rise by the same amount.
XV-023Practice bank se · 2
A commodity's spot price is ₹8,200 per unit, while otherwise comparable futures prices decline with maturity and the three-month contract trades at ₹7,900. This curve is best described as:
Backwardation is a downward-sloping futures structure in which deferred futures prices are below spot or nearer-term prices. It can occur when immediate availability has high value relative to carrying costs. Remember: Backwardation describes curve structure, not necessarily a prediction that future spot prices must fall.
Hint Common mistake: Treating the futures curve as a certain forecast of future spot prices.
XV-044Practice bank se · 3
For a globally traded commodity quoted primarily in US dollars, a broad strengthening of the US dollar is commonly viewed, other things equal, as:
A stronger US dollar can make a dollar-priced commodity more expensive for buyers using other currencies and is therefore often a headwind to the commodity's dollar price, all else equal. The relationship is not mechanical because supply, demand and inventories also matter. Remember: Commodity analysis combines currency effects with physical supply-demand fundamentals.
Hint Common mistake: Treating the dollar-commodity relationship as a perfect inverse rule.
XV-045Practice bank se · 4
An analyst is forecasting the near-term supply of a major seasonal crop. Which information set is most directly relevant?
Agricultural supply depends strongly on planted acreage, weather, crop progress, yields, inventories and seasonality. These are core physical-market fundamentals. Remember: For agricultural commodities, focus on the physical supply chain and seasonal production variables.
Hint Common mistake: Using financial-market indicators as substitutes for crop fundamentals.
XV-046Practice bank se · 5
Exchange-monitored inventories of an industrial metal fall steadily for several months while consumption remains firm and new supply is constrained. What does this most reasonably suggest?
Falling inventories alongside firm demand and constrained supply are consistent with a tightening physical balance. That can support prices, although substitution, hidden inventories, imports and macro conditions still matter. Remember: Inventory data are interpreted together with demand, supply and the location/quality of stocks.
Hint Common mistake: Assuming falling reported inventories alone prove a price increase.
XV-047Practice bank se · 6
A farmer expects to sell a crop after three months and is worried that the commodity price may fall before sale. Ignoring basis risk and contract-size mismatch, which futures hedge is directionally appropriate?
A producer with future physical inventory is naturally exposed to falling prices. Selling futures can offset some or all of that downside because a decline in the futures price can generate a gain on the short futures position, subject to basis and execution risks. Remember: Hedge direction should offset the underlying physical exposure.
Hint Common mistake: A producer expecting to sell later often needs a short, not a long, futures hedge.
XV-088Practice bank se · 7
A producer expects to sell 1,000 units of a commodity. Each futures contract represents 100 units. If the analyst chooses a hedge ratio of 0.8, how many futures contracts are required for the hedge?
Number of contracts = Exposure units × Hedge ratio ÷ Contract size = 1,000 × 0.8 ÷ 100 = 8 contracts. Remember: A hedge ratio determines what fraction of the underlying exposure is offset with futures.
Hint Common mistake: Using the full physical exposure when the stated hedge ratio is below 1.
XV-124Practice bank se · 8
A commodity's international US-dollar price is unchanged, but the rupee depreciates materially against the dollar. Ignoring tariffs, freight and local basis changes, the commodity's rupee-denominated domestic price would tend to:
If the dollar price is unchanged but each dollar costs more rupees, the rupee equivalent of the same international price rises. Remember: Domestic commodity prices can move because of either the international price or the exchange rate, even if the other factor is unchanged.
Hint Common mistake: Looking only at the international-dollar quote and ignoring currency translation.
XV-125Practice bank se · 9
A geopolitical event unexpectedly disrupts exports from a country that is a major global supplier of a commodity. If near-term demand is unchanged and replacement supply is limited, the most likely immediate fundamental effect is:
A disruption to a major source of supply tightens the near-term physical balance if demand and replacement supply do not adjust, creating upward price pressure. Remember: Commodity prices respond to changes in physical supply, demand and the ability of the market to substitute.
Hint Common mistake: Assuming geopolitical news matters only to financial markets and not to physical commodity flows.
XV-126