L4M4 Practice Tests & Results

Question 1:
When deciding on 'Make versus Buy', procurement professionals have to consider the
level of competition in supply market. Which of the following will improve the buying
organisation's bargaining power?

Question 2:
Which of the following governs the public sector procurement and sourcing within
the EU and EEA?

Question 3:
Which of the following encourages procurement professionals to avoid
discrimination, treat suppliers fairly and respectfully and a transparent approach to
sourcing?
Question 4:
Which of the following is the operating activities that will create the cash outflow?

Question 5:
In which of the following Incoterms, buyer is not obliged to pay all costs and taxes of
import clearance (if both parties do not have any other arrangement)?
 Question 6:
Industry continues to become more reliant on technology and the risks of
cyberattacks increases. Which of the following may help procurement professional
assess potential cybersecurity risk associated with Australian suppliers?

Question 7:
Which of the following sectors is legally bound by OJEU procurement procedures?

Not-for-profit sector

Third sector

•
 Private sector

Public sector
Question 8:
Organisations which do not take action to prevent bribery practices in their supply chains
are exposed to which of the following?

Poor credit rating

More suppliers

Higher costs

Reputational damage
Question 9:
Which of the following is the group of items that have high profit impact and a high supply
risk where there may be little or no supplier competition in the supply market, so that
procurement professionals must spend the most time and resources to ensure that the right
supplier is awarded the contract?

Bottleneck items

Strategic items

Leverage items

•
 Non-critical items
Question 10:
Which of the following represent the triple bottom line? Select THREE that apply.

Planet

Procurement

Profit

Process

Price

People
Question 11:
In which of the following approaches, the negotiator will focus on finding a mutually
benefit outcome where the supplier has significant potential to help buyer innovate and
launch new product/service?

A collaborative style

A competitive style

A compromising style
•

An avoiding style
Question 12:
Which of the following is the act of entering into a financial contract in order to protect
against unexpected, expected or anticipated changes in currency exchange rates?

Fiat currency

Credit rating scores

Currency hedging

Gold standard
Question 13:
Which of the following are the purposes of non-for-profit organisations? Select TWO that
apply.

Political lobbying on behalf of a cause, issue or group

Providing aid and services to the public or specific beneficiaries

Increasing level of social infrastructure, income and welfare

National defence
•

Return on shareholders' investment

Question 14:
Which of the following are sources of primary data? Select TWO that apply:

Stock market index

Conversations with supplier

Government reports

Supplier websites

Customer questionnaires
Question 15:
Which of the following can be done by procurement professional to understand supplier's
ethical practice during pre-qualification stage?
1. Reviewing contract performance between buyer and supplier
2. Spying on supplier's activities
3. Requesting for qualifications of product or service
4. Checking on media reports

1 and 4 only

2 and 3 only
•

1 and 2 only

3 and 4 only
Question 16:
When assessing supplier's proposals, which of the following is the group of items that
procurement professional should spend the least time and resources?

Strategic items

Bottleneck items

Routine items

Leverage items
Question 17:
Which of the following are most likely to be possible risks of selecting financially unstable
suppliers? Select TWO that apply:

Negative contribution to the environment

Incompatibility with supplier's systems

Delay or failure to supply

•

Potential exposure to supplier's outdated technology

Risks to modern slavery in supply chain

Question 18:
In which of the following criteria, procurement professionals will evaluate whether a
supplier would be a good functional fit and whether supplier's system can easily integrate
with the buying organisation? Select TWO that apply:

Total life-cycle cost

Added value solutions

Technical merit

Price

Systems and resources

Question 19:
Which of the following will demonstrate the organisation's commitment to ethical and
sustainable practice? Select TWO that apply.

Using fair and transparent procurement process

Making charitable donations

•

Organisation's poor performance within the contract

Hiring qualified staff

Achieving accreditations from professional bodies that certify ethical or sustainable practice
Question 20:
Which of the following involves supplier analysis, make or buy decisions, the consideration
of outsourcing and evaluating associated risks?

Sourcing

Tender assessment

Purchasing

Insourcing
Question 21:
David is assigned for analysing a potential supplier's financial statements for a long-term
project. He realises that supplier's non-current liabilities double its equity. Which of the
following is most likely to be right assumption about that supplier's financial situation?

David's company may extend the payment period with this supplier

The supplier is exposed to risks in long-term

•

The supplier is less susceptible to downturns in the economy and the business cycle

The supplier has capabilities to implement the project

Question 22:
When would multiple sourcing bring the best result to buying organisation? Select TWO
that apply:

When economies of scale can be achieved

When buying organisation aims at responding better to urgent requirements for less critical products
and materials.

When there is a commitment by both customer and supplier to a long-term relationship based on
continuous improvement

When supplier competition is vast but there is a supplier offering outstanding value for money

When supplier competition is vast and there is almost no difference between suppliers
Question 23:
Which of the following are macro environments in the acronym STEEPLE?

Suppliers, Technological, Economic, Environmental, Privacy, Legal, Ethical

Suppliers, Technological, Education, Environmental, Political, Legal, Ethical

•

Social, Tariff, Economic, Environmental, Political, Legal, Energy

Social, Technological, Economic, Environmental, Political, Legal, Ethical

Question 24:
Which of the following is most likely to reflect a supplier's environmental and social
awareness?

C&B policies

CSR policies

Credit score rating

CISG
Question 25:
Which of the following is the best description of in-sourcing?

To source goods or services from functions within a company or an organisation

To bring a function of activities back in-house after previously being outsourced

To source goods or services from companies which belong to the same group

•
 A private network within an organisation or group of organisations
Question 26:
Which of the following are reasons why a global organisation opts to use transfer pricing
arrangements? Select TWO that apply:

Reduction in international tax expense

Simply internal accounting procedure

Leveraging local sourcing better

No risk of tax evasion

Improving local economy

Question 27:
In which of the following marketplaces, forecasts on prices of commodities will be used?

Cryptocurrency exchange

Futures exchange

Forex exchange

Securities exchange
 Question 1: Correct
When deciding on 'Make versus Buy', procurement professionals have to consider the
level of competition in supply market. Which of the following will improve the buying
organisation's bargaining power?

High direct labour costs

Substitutes for the product or service are readily available

(Correct)

The suppliers are larger than the buying organisation in the industry and more concentrated

The market has high entry barrier to new entrants

Explanation

The make or buy decision is whether to manufacture a product or provide a service in-
house, or to source it from an external supplier. It requires thinking about the following
factors:

- The product or service.

- The organisation's current position.

- The current market situation.

- The amount of competition. This is about the power of the buying organisation compared
with the power of supplying organisation. If there are few or no alternative suppliers, the
buying organisation will not be in a strong position to negotiate a favourable price so would
benefit from making the items, and vice versa. Available substitution will increase the
bargaining power of buyers as they have more alternative options to select.

High barriers to new entrants will lead to fewer new suppliers and may decrease the
bargaining power of buyer.

Larger suppliers will also defer buyer's power.

 Labour cost has almost no effect on buyer's power.

LO 1, AC 1.1

Question 2: Correct
Which of the following governs the public sector procurement and sourcing within
the EU and EEA?

The Freedom of Information Act

Directive 2014/24/EU

(Correct)

Public Contract Regulations

Title VI, Treaty of Rome

Explanation

Within the EU and EEA, public sector procurement and sourcing is governed by the
European Parliament through the 2014 Public Procurement Directive. Under Directive
2014/24/EU, public sector contracts above a certain value must be opened to competition
for tendering.

LO 3, AC 3.1

Question 3: Correct
Which of the following encourages procurement professionals to avoid
discrimination, treat suppliers fairly and respectfully and a transparent approach to
sourcing?

Corporate social responsibility policies

•
 Bribery Act 2010

CIPS Code of Conduct

(Correct)

Charter of Fundamental Rights of the European Union

Explanation

It is important that procurement professionals take an approach that is fair and responsible
when working with current or potential suppliers. CIPS Code of Conduct sets out some
ethical norms which encourage its members to act responsibly. Members should encourage
their organisation to adopt an ethical procurement and supply policy based on the
principles of this code and raise any matter of concern relating to business ethics at an
appropriate level within their organisation.

You may look at CIPS Code of Conduct here

Bribery Act and Charter of Fundamental Rights of the European Union are regulatory
statutes which are mandatory to all individuals and businesses within a country or union.

CSR policies cover many aspects such as environmental, social, labour,... and they are often
only applicable within a company.

LO 3, AC 3.1

Question 4: Incorrect
Which of the following is the operating activities that will create the cash outflow?

Payment of wages

(Correct)

Payment of dividends

•
 Payment of loans

Sales of goods

(Incorrect)

Explanation

Cash flow statement contains details about the amount of money that came into and went
out of an organisation during its accounting period. Cash flow statements log cash coming
in and leaving an organisation from three different activities as below:

LO 2, AC 2.3

Question 5: Incorrect
In which of the following Incoterms, buyer is not obliged to pay all costs and taxes of
import clearance (if both parties do not have any other arrangement)?

CIF

DAP
 (Incorrect)

DPU

DDP

(Correct)

Explanation

In Incoterms DDP the seller delivers the goods, without unloading, at the buyer's premises
or a nearby place in the country of destination. The transport risk is transferred from the
buyer to the seller in the same place where the goods are delivered. Any import tax and
specifically VAT, are paid by the seller, unless the parties agree in the contract of sale that
VAT or other taxes are paid by the buyer. In that case if a variant of DDP, known as "DDP
VAT unpaid", should be used.

LO 3, AC 3.2

Question 6: Incorrect
Industry continues to become more reliant on technology and the risks of
cyberattacks increases. Which of the following may help procurement professional
assess potential cybersecurity risk associated with Australian suppliers?

COSI Index

(Incorrect)

FICO's credit score

SBLI

•
 CARR

(Correct)

Explanation

CARR – Cyber Assurance Risk Rating, powered by Security in Depth, is a highly developed
review of an organisation’s Cyber Security Maturity as well as an understanding of how likely
that organisation is to be compromised by a Cyber Incident in the next 12 months. Much
like credit scores, a CARR score is generated through a review of both external and internal
operations of an organisation, making it possible to proactively identify, quantify and
manage Cyber Risk throughout the organisations ecosystem.

A Cost of Savings Index (COSI) is a popular index used for certain adjustable-rate
mortgages (ARMs). The index is a weighted average of the rates of interest on the deposit
accounts (sometimes called cost of savings) of the federally insured depository institution
subsidiaries of Golden West Financial Corporation (GDW). These subsidiaries currently
operate under the name World Savings.

The Small Business Lending Index (SLBI) is an index of business lending that is published
by Thomson Reuters/Paynet that is generally considered to be a leading indicator of the
economy. It measures the aggregate number of new loans that are made to small
businesses, using 2005 as the base year for computations.

FICO, or Fair Isaac, credit scores are a method of quantifying and evaluating an
individual's creditworthiness. Scores range from 300 to 850, with some lenders considering
a score below 620 as subprime.

LO 2, AC 2.1

Question 7: Correct
Which of the following sectors is legally bound by OJEU procurement procedures?

Not-for-profit sector

Third sector

Private sector
•

Public sector

(Correct)

Explanation

OJEU is the Official Journal of European Union. Public sector organisations are bound by
OJEU specific approaches but private organisations are not. Like private sector, third sector
doesn't have procurement regulation.

LO 2, AC 2.2

Question 8: Correct
Organisations which do not take action to prevent bribery practices in their supply
chains are exposed to which of the following?

Poor credit rating

More suppliers

Higher costs

Reputational damage

(Correct)

Explanation

Organisations which do not prevent unethical practices may face disapproval from
authorities and the public. They may be fined or restricted to attend public procurement
and boycotted by customers. Reputation is the first aspect being affected by such unethical
practices. Reputational damages also lead to other consequences like financial instability,
reduced revenue, losing market share,...

LO 4, AC 4.1
 Question 9: Correct
Which of the following is the group of items that have high profit impact and a high
supply risk where there may be little or no supplier competition in the supply market,
so that procurement professionals must spend the most time and resources to ensure
that the right supplier is awarded the contract?

Bottleneck items

Strategic items

(Correct)

Leverage items

Non-critical items

Explanation

According to Kraljc's matrix, procurement professionals can identify where a product or

service sits in relation to the profit impact on the organisation and the level of supply risk to
the organisation.

There may be little or no supplier competition, then securing the supply is critical and
supply is high.

Procurement professionals spend much time and resources on items that have high profit
impact on the organisation. So these items are categorised as high profit impact and high
supply risk, they are strategic items.

LO 1, AC 1.1

Question 10: Correct

Which of the following represent the triple bottom line? Select THREE that apply.

Planet
 (Correct)

Procurement

Profit

(Correct)

Process

Price

People

(Correct)

Explanation

The triple bottom line (TBL or 3 Ps) is a framework or theory that recommends that
companies commit to focus on social and environmental concerns just as they do on profits.
The TBL posits that instead of one bottom line, there should be three: profit, people, and the
planet.

• Profit: An organization’s economic focus on generating financial wealth

• People: An organization’s socio-cultural focus on those it directly and indirectly affects

• Planet An organization’s focus on its impact on the environment

 LO 4, AC 4.4

Question 11: Correct

In which of the following approaches, the negotiator will focus on finding a mutually
benefit outcome where the supplier has significant potential to help buyer innovate
and launch new product/service?

A collaborative style

(Correct)

A competitive style

A compromising style

An avoiding style

Explanation

There are 5 styles of negotiation based on Thomas-Kilmann conflict mode instrument.

- A collaborative style is an honest and open style where the negotiator is focused on
finding mutually beneficial outcome and fair solution to any issue that may be presented.
From a procurement point of view, it might make sense to adopt this approach in situations
where you have identified that your supplier has significant potential to help you innovate
and launch new products and/or services.
 - A competitive style

- An avoiding style

- Accommodating styles

- A compromising style

LO 1, AC 1.2

Question 12: Correct

Which of the following is the act of entering into a financial contract in order to
protect against unexpected, expected or anticipated changes in currency exchange
rates?

Fiat currency

Credit rating scores

Currency hedging
 (Correct)

Gold standard

Explanation

In very simple terms, Currency Hedging is the act of entering into a financial contract in
order to protect against unexpected, expected or anticipated changes in currency exchange
rates.

Currency hedging is used by financial investors and businesses to eliminate risks they
encounter when conducting business internationally. Hedging can be likened to an
insurance policy that limits the impact of foreign exchange risk.

Hedging can be accomplished by purchasing or booking different types of contracts that

are designed to achieve specific goals. These goals are based on the level of risk the
customer is exposed to and seeking protection from and allow the individual to lock in
future rates without affecting, to a great extent, their liquidity.

Fiat money is government-issued currency that is not backed by a physical commodity,

such as gold or silver, but rather by the government that issued it. The value of fiat money is
derived from the relationship between supply and demand and the stability of the issuing
government, rather than the worth of a commodity backing it as is the case for commodity
money. Most modern paper currencies are fiat currencies, including the U.S. dollar, the euro
and other major global currencies.

The gold standard is a monetary system where a country's currency or paper money has a
value directly linked to gold. With the gold standard, countries agreed to convert paper
money into a fixed amount of gold. A country that uses the gold standard sets a fixed price
for gold and buys and sells gold at that price.

LO 3, AC 3.2

Question 13: Correct

Which of the following are the purposes of non-for-profit organisations? Select TWO
that apply.

Political lobbying on behalf of a cause, issue or group

(Correct)

•
 Providing aid and services to the public or specific beneficiaries

(Correct)

Increasing level of social infrastructure, income and welfare

National defence

Return on shareholders' investment

Explanation

Not-for-profit sector - objectives

• Raise public awareness of a cause or issue

• Political lobbying on behalf of a cause, issue or group

• Raise funds to carry out activities

• Provide aid and services to the public or specific beneficiaries

• Provide services to members

• Mobilise members of the public in community projects, for mutual benefit

LO 3, AC 3.1

Question 14: Incorrect

Which of the following are sources of primary data? Select TWO that apply:

Stock market index

Conversations with supplier

(Correct)
•

Government reports

Supplier websites

(Incorrect)

Customer questionnaires

(Correct)

Explanation

Primary data is new and is specifically collected directly from the relevant source by the
individual or organisation that is going to use it. Primary data can be collected in the
following ways:

- Direct communication

- Networking

- Specifically-commissioned market research: focus group, interviews, questionnaires, etc

- Trade fairs and exhibitions

LO 2, AC 2.1

Question 15: Incorrect

Which of the following can be done by procurement professional to understand
supplier's ethical practice during pre-qualification stage?

1. Reviewing contract performance between buyer and supplier

2. Spying on supplier's activities

3. Requesting for qualifications of product or service

4. Checking on media reports

1 and 4 only
 (Incorrect)

2 and 3 only

1 and 2 only

3 and 4 only

(Correct)

Explanation

Due diligence can be carried out in great detail by accessing a large number of factors, or a
lesser check can be done, where only one factor (such as financial performance) is accessed.
Some examples of common due diligence factors are given below:

1. First impression of the supplier

2. Product or service quality

3. Qualifications of product or service providers

4. Background checks:

- Adverse media

- Criminal convictions

- Corrupt practice

- Financial performance

LO 4, AC 4.2

Question 16: Correct

When assessing supplier's proposals, which of the following is the group of items that
procurement professional should spend the least time and resources?

Strategic items
•

Bottleneck items

Routine items

(Correct)

Leverage items

Explanation

When assessing suppliers' proposals, the procurement professional must consider the
following areas:

- The value of the product/service

- The positioning of it, e.g., strategic, routine

- Existing supplier relationships

- Economies of scale

- Risks of moving suppliers

 LO 2, AC 2.3

Question 17: Incorrect

Which of the following are most likely to be possible risks of selecting financially
unstable suppliers? Select TWO that apply:

Negative contribution to the environment

Incompatibility with supplier's systems

Delay or failure to supply

(Correct)

Potential exposure to supplier's outdated technology

(Correct)

Risks to modern slavery in supply chain

(Incorrect)

Explanation

If a supplier has poor financial stability, it will lead to the following outcomes:

- Delay or failure to supply

- Inability to invest: If a supplier does not appear to be financially stable, they may not have
the fund to invest in up-to-date technology or equipment necessary to fulfil contracts. Buyer
is more likely to be exposure to outdated technology.

- Supplier dependency on the buying organisation: While it is important that any buying
business is appreciated by the supplier, becoming over-reliant on one contract is not good
practice financially.
 LO 1, AC 1.3

Question 18: Incorrect

In which of the following criteria, procurement professionals will evaluate whether a
supplier would be a good functional fit and whether supplier's system can easily
integrate with the buying organisation? Select TWO that apply:

Total life-cycle cost

(Incorrect)

Added value solutions

Technical merit

(Correct)

Price

Systems and resources

(Correct)

Explanation

When a list of suitable suppliers has been selected, procurement professionals can send out
ITT or RFQ. Once they have received the bids or quotations, they should analyse the offer to
establish which supplier offers the best value for money. Typical award criteria are as below:

- Price

- Total life-cycle cost

 - Technical merit: Procurement professionals should evaluate the technical merit of suppliers
before deciding which one a contract should be awarded to. Supplier should be able to
demonstrate that they would be a good functional fit with buying organisation.

- Added value

- Systems and resources: A supplier's system should be compatible with the buying
organisation's system

LO 1, AC 1.4

Question 19: Correct

Which of the following will demonstrate the organisation's commitment to ethical
and sustainable practice? Select TWO that apply.

Using fair and transparent procurement process

(Correct)

Making charitable donations

Organisation's poor performance within the contract

Hiring qualified staff

Achieving accreditations from professional bodies that certify ethical or sustainable practice

(Correct)

Explanation

While supplier may state verbally that they are committed to ethical and sustainable
practice in the way they work, they may also explicitly demonstrate this commitment
through the attributes shown in the following:
 LO 4, AC 4.3

Question 20: Correct

Which of the following involves supplier analysis, make or buy decisions, the
consideration of outsourcing and evaluating associated risks?

Sourcing

(Correct)

Tender assessment

Purchasing

Insourcing

Explanation
 Sourcing is a key part of the procurement cycle. It involves establishing, evaluating and
engaging with suppliers to achieve the best value for money when purchasing goods or
services. Sourcing covers many aspects including supplier analysis, make or buy decisions,
the consideration of outsourcing and evaluating associated risks.

Insource is to bring a function of activity back inhouse after previously being outsource.

Tender assessment is usually declared to bidders at the start and will reflect the buying
organisation's priorities, usually the needs of the stakeholders.

Purchasing is the act of physically ordering ordering and buying something.

LO 1, AC 1.1

Question 21: Correct

David is assigned for analysing a potential supplier's financial statements for a long-
term project. He realises that supplier's non-current liabilities double its equity. Which
of the following is most likely to be right assumption about that supplier's financial
situation?

David's company may extend the payment period with this supplier

The supplier is exposed to risks in long-term

(Correct)

The supplier is less susceptible to downturns in the economy and the business cycle

The supplier has capabilities to implement the project

Explanation

The ratio between non-current liabilities and shareholders' equity is called gearing. Gearing
is a measurement of how much of an organisation's long-term funding is represented by
long-term debt or loans, in relation to the equity in the business.

High gearing means that there is a lot of long-term debt within the company, which may
represent a risk in the long term.
 Normally, ideal result for gearing is 50%. In this scenario, supplier's gearing is 200% (non-
current ratio/equity = 2). This is an alert sign and the business seems very risky.

LO 1, AC 1.3

Question 22: Incorrect

When would multiple sourcing bring the best result to buying organisation? Select
TWO that apply:

When economies of scale can be achieved

When buying organisation aims at responding better to urgent requirements for less critical
products and materials.

(Correct)

When there is a commitment by both customer and supplier to a long-term relationship

based on continuous improvement

When supplier competition is vast but there is a supplier offering outstanding value for
money

(Incorrect)

When supplier competition is vast and there is almost no difference between suppliers

(Correct)

Explanation

Multiple sourcing is where many suppliers are responsible for supplying all the needs for an
item to an organisation. Multiple sourcing is used in the following circumstances:

- Supplier competition is vast

 - The supplier relationship is not critical

- Constant supply is critical

LO 1, AC 1.2

Question 23: Correct

Which of the following are macro environments in the acronym STEEPLE?

Suppliers, Technological, Economic, Environmental, Privacy, Legal, Ethical

Suppliers, Technological, Education, Environmental, Political, Legal, Ethical

Social, Tariff, Economic, Environmental, Political, Legal, Energy

Social, Technological, Economic, Environmental, Political, Legal, Ethical

(Correct)

Explanation

STEEPLE is one of the concepts that are used to analyse the macro-environmental factors
that are used in business analysis. It is an extension of PEST model (Political, Economic,
Social, Technological). STEEPLE is very often used with the SWOT analysis, which acts as an
analysis of internal factors.

STEEPLE stands for:

- Social: Social factors include demographics, lifestyle, age groups and education levels etc.

- Technological: Factors include the state of the technological advancement and trends in
technology etc.

- Economic: It includes economic factors like GDP growth rate, inflation rates, interest rates
set up the central bank etc.

- Environmental: It includes weather and climate of the region, the flora and fauna of the
region, etc.
 - Political: It includes the type of Government that exists and its ideology exhibited by the
various tariffs imposed, incentives given, and the stability of the government etc.

- Legal: as the name suggests, the legal factors include whether any law has been broken.
E.g. competition law, minority protection act etc.

- Ethics: the general code of ethics followed by most of the people in the region, and the
tendency of the people to be ethical

LO 1, AC 1.1

Question 24: Correct

Which of the following is most likely to reflect a supplier's environmental and social
awareness?

C&B policies

CSR policies

(Correct)

Credit score rating

CISG

Explanation

Procurement professional wishes to work with suppliers that are environmentally aware and
have sustainability policies. In order to evaluate criteria, they may request copies of the
supplier's corporate social responsibility (CSR) policies.

LO 1, AC 1.3

Question 25: Incorrect

Which of the following is the best description of in-sourcing?

•
 To source goods or services from functions within a company or an organisation

(Incorrect)

To bring a function of activities back in-house after previously being outsourced

(Correct)

To source goods or services from companies which belong to the same group

A private network within an organisation or group of organisations

Explanation

In-sourcing is to bring a function of activities back in-house after previously being

outsourced

LO 1, AC 1.1

Question 26: Incorrect

Which of the following are reasons why a global organisation opts to use transfer
pricing arrangements? Select TWO that apply:

Reduction in international tax expense

(Correct)

Simply internal accounting procedure

(Correct)

Leveraging local sourcing better

 (Incorrect)

No risk of tax evasion

Improving local economy

Explanation

Transfer prices are the amounts of money payable between divisions of the same
organisation that have conducted business with each other. Common forms of transactions
are supplying labour or trading products between divisions or departments.

LO 1, AC 1.2

Question 27: Incorrect

In which of the following marketplaces, forecasts on prices of commodities will be
used?

Cryptocurrency exchange

Futures exchange
 (Correct)

Forex exchange

(Incorrect)

Securities exchange

Explanation

Commodity pricing forecasts are used within a futures exchange. Futures exchange is a
marketplace where the seller of a commodity agrees to sell or buy a certain amount of the
commodity to a buyer at a particular price on a specific date in the future.

LO 2, AC 2.1