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

Which of the following describes the function of a Commodity Trading Advisor?

1. Processes transactions for merchants accepting credit cards

2. Provides direct or indirect advice on buying and selling futures

3. Offers guaranteed returns on commodity investments

4. Facilitates cross-border casino transactions

The correct answer is: Provides direct or indirect advice on buying and selling futures

A Commodity Trading Advisor (CTA) plays a crucial role in the financial markets by offering specialized advice on trading strategies related to commodity futures. The correct answer highlights this function, emphasizing that CTAs provide both direct and indirect advice on buying and selling futures contracts, which are agreements to buy or sell a commodity at a predetermined price at a future date. This advisory role is essential for clients looking to navigate the complexities of commodity trading, as it allows them to make informed investment decisions based on market trends, risks, and opportunities. The nature of a CTA's work involves utilizing their expertise and analysis of market conditions to guide clients on when to enter or exit trades, helping them manage their investment portfolios effectively. This advisory capacity distinguishes CTAs from other financial service providers. The other options do not align with the primary role of a Commodity Trading Advisor. Processing transactions for merchants related to credit card payments involves payment processing and merchant services, which is unrelated to commodity trading. Offering guaranteed returns on investments is misleading and potentially unethical, as all investments carry risks, and no legitimate advisor can guarantee profits. Facilitating cross-border casino transactions pertains to gaming and gambling regulations rather than commodity trading, further reinforcing that answer choice B accurately captures the essence of what CTAs do in the financial