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2
ASSIGNMENT 1
Pre-reading task
I. Answer the question.
1. Adam Smith, a well-known philosopher and economist, resorted to an
expression “an invisible hand”. What did he mean?
II. Read the text.
Commodity and Money Markets (Text 1)
The organization of the commodity markets varies considerably as each
has developed a particular set of customs and traditions which govern the
dealing. They all have this in common – trade is conducted at wholesale level. A
high standard of trading practice is guaranteed by trade rules which are observed
by all recognized brokers and the majority of the traders.
Most of the trading is done by private treaty much the same as on the floor
of the Stock Exchange and the role of the commodity broker is somewhat
similar to that of the stockbroker, though some deals are transacted directly
between importer and dealers. The terms of business are normally on a “CIF
forward” basis: this means that the price includes the cost of the goods,
insurance and freight for which payment will usually be demanded against
presentation of the shipping documents. Since in many cases these papers arrive
well in advance of the actual goods, the old system of physical inspection of the
commodity has largely disappeared. In its place, sales are conducted by sample
or by description, which, in turn, depend on meticulous grading and agreed
specifications.
Commodity prices are quoted either for prompt delivery (“spot”) or for
delivery some months ahead (“forward”); and the price quotations vary for
contracts according to the delivery date. A special term “Futures” (or
“Terminal”) is an abbreviation of the more fully explanatory “Contract for
2
ASSIGNMENT 1
Pre-reading task
I. Answer the question.
1. Adam Smith, a well-known philosopher and economist, resorted to an
expression “an invisible hand”. What did he mean?
II. Read the text.
Commodity and Money Markets (Text 1)
The organization of the commodity markets varies considerably as each
has developed a particular set of customs and traditions which govern the
dealing. They all have this in common – trade is conducted at wholesale level. A
high standard of trading practice is guaranteed by trade rules which are observed
by all recognized brokers and the majority of the traders.
Most of the trading is done by private treaty much the same as on the floor
of the Stock Exchange and the role of the commodity broker is somewhat
similar to that of the stockbroker, though some deals are transacted directly
between importer and dealers. The terms of business are normally on a “CIF
forward” basis: this means that the price includes the cost of the goods,
insurance and freight for which payment will usually be demanded against
presentation of the shipping documents. Since in many cases these papers arrive
well in advance of the actual goods, the old system of physical inspection of the
commodity has largely disappeared. In its place, sales are conducted by sample
or by description, which, in turn, depend on meticulous grading and agreed
specifications.
Commodity prices are quoted either for prompt delivery (“spot”) or for
delivery some months ahead (“forward”); and the price quotations vary for
contracts according to the delivery date. A special term “Futures” (or
“Terminal”) is an abbreviation of the more fully explanatory “Contract for
