Trading Jobs Energy Trading For Dummies 4

Question 1

What does OPEC primarily influence in global energy markets?

Accepted Answer

Crude oil supply through production quotas

Answer

Natural gas pipeline routing in the US

Answer

Electricity grid frequency

Answer

Carbon credit accounting standards

Question 2

A 'swap' in energy trading typically involves:

Accepted Answer

Exchanging a floating price for a fixed price over a period

Answer

Physically swapping two cargoes of crude

Answer

Trading one exchange membership for another

Answer

Replacing a trader on the desk

Question 3

What is 'open interest' in a futures market?

Accepted Answer

The total number of outstanding contracts not yet settled

Answer

The interest rate paid on margin deposits

Answer

The number of new traders that day

Answer

The percentage of contracts that expired

Question 4

Which of the following is a key physical constraint that affects natural gas prices regionally?

Accepted Answer

Pipeline transport capacity

Answer

Stock market index levels

Answer

Foreign exchange holidays

Answer

Corporate dividend dates

Question 5

What does 'VaR' (Value at Risk) estimate for a trading book?

Accepted Answer

The potential loss over a period at a given confidence level

Answer

The total revenue of the firm

Answer

The guaranteed minimum profit

Answer

The number of trades executed

Question 6

Why might a power trader buy electricity futures ahead of a heat wave?

Accepted Answer

To lock in supply before cooling demand drives prices up

Answer

To reduce the grid frequency

Answer

To avoid paying any margin

Answer

To shut down power plants

Question 7

What is 'counterparty risk' in over-the-counter energy trades?

Accepted Answer

The risk that the other party fails to fulfill the contract

Answer

The risk of weather forecast errors

Answer

The risk of an exchange outage

Answer

The risk of mislabeling a fuel grade