WAEC Commerce 2019 Theory — Question 4

Model answer

(a) Benefits of commodity exchange: • It encourages import-export competitiveness. • It encourages price stability. • It encourages portfolio diversification, since more options are available for buyers and sellers. (b) Methods of trading in a commodity exchange: (i) Futures: done by opening an account in a futures trading firm and putting a substantial amount of money into that account. (ii) Mutual funds: involves people with similar interests coming together and investing in a company closely tied to commodity trading. (c) Requirements for trading in a commodity exchange: (i) Copy of the memorandum and articles of association from the Corporate Affairs Commission (CAC). (ii) Credentials of sponsored individuals. (iii) Evidence of minimum paid-up capital. (iv) Certificate of incorporation.