Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

What is a common characteristic of commodities?

1. They are usually traded online

2. They are often traded in large amounts

3. They have a fixed price

4. They are unique items

The correct answer is: They are often traded in large amounts

Commodities are typically characterized by being standardized and fungible, meaning that they can be traded in large volumes without differentiation in quality. This is essential for facilitating trade on exchanges where large quantities are required to meet supply and demand effectively. Trading in large amounts allows for economies of scale and makes it easier for market participants to enter and exit positions without significantly impacting the market price. This characteristic is crucial in commodity markets, as it underscores the nature of commodities as interchangeable goods. Unlike unique items or products with fixed prices, commodities have variable pricing that may fluctuate based on market conditions, supply, and demand factors. Therefore, the correct answer reflects the fundamental nature of commodities and their trading practices in financial markets.