Daily Editorial Cloze Test Quiz – 78 (New Pattern)

Editorial Cloze Test Quiz

With the introduction of a new financial instrument, India is a step closer to building a vibrant market for commodities. Success in the long journey, however, will require avoiding some policy mistakes of the past. The Multi Commodity Exchange has ______(1)_______ (introduce) gold option contracts for the first time in India. The derivative instrument allows investors to ______(2)_______ (enter) into contracts to either buy or sell gold sometime in the future at a pre-determined price, thus allowing investors to hedge any volatility in the price of the metal, for a price. The fact that options usually also turn out to be cheaper than binding future agreements ______(3)_______ (help) in the wider participation of investors in the realm of commodity speculation. As Finance Minister Arun Jaitley stated during the launch of the derivative at the MCX, gold options will also help bring into formal channels more of the gold that is traded. Notably, the introduction of gold options is in line with the government’s announcement last year that it _____(4)______ (will) take steps towards introducing new varieties of commodity derivatives in the market. MCX, in fact, has said it might seek permission to write options contracts on other commodities which, based on their current futures trading volumes, satisfy rules set by SEBI. To improve market efficiency, the market regulator is also mulling the entry of mutual funds and portfolio management services into the business of investing in commodity derivatives. Naturally, some concerns have been expressed over financial speculation. The benefits of well-regulated commodity speculation, however, are likely to outweigh the potential systemic risk from asset bubbles. Options, like other financial derivatives, allow price risks to be transferred _______(5)_______ (across) market players in an efficient manner.


Editorial Cloze Test Quiz

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