Back To School Quiz #1

6 Questions | Total Attempts: 531

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Back To School Quiz #1

Ed’s challenging and authentic quiz questions are designed to test your grain marketing knowledge, and will help you learn while having fun! Ed Usset is the author of “Grain Marketing is Simple, It’s Just Not Easy,” and is a grain marketing specialist at the University of Minnesota. *This will be our last quiz for this first part of "Back to School. " Look for the Exam, next Wednesday morning, August 19, and see how far you've come along! This will be up for exactly one week. At that time, we will begin a new quiz with new challenging and authentic questions from Ed Usset himself!*


Questions and Answers
  • 1. 
    In grain merchandising, basis…
    • A. 

      Is more predictable than flat prices

    • B. 

      Consists partly of transportation costs and local supply and demand

    • C. 

      Is the link between cash and futures prices at some specific location

    • D. 

      All of the above

  • 2. 
    When a put option is exercised, the seller of a put…
    • A. 

      Is long a put

    • B. 

      Is short a call

    • C. 

      Is long the underlying futures contract

    • D. 

      Is short the underlying futures contract

    • E. 

      Pays the premium

  • 3. 
    The option premium and option strike price are (respectively)…
    • A. 

      Set by the exchange and determined at expiration

    • B. 

      Set at expiration and determined when exercised

    • C. 

      Negotiated by open outcry and determined by the exchange

  • 4. 
    U.S. corn demand is made up of three broad categories. Which of these three is projected to be the largest part of total corn demand in the 2009/2010 crop year?
    • A. 

      Feed demand

    • B. 

      Food, seed and industrial demand

    • C. 

      Export demand

  • 5. 
    Options buyers pay a premium to purchase “rights” – calls and puts. What are the primary components of the premium?
    • A. 

      Intrinsic value and the strike price

    • B. 

      Time value and the futures price

    • C. 

      Intrinsic value and time value

  • 6. 
    Let’s assume that November soybean futures are trading at $9.75. You pay a premium of 90 cents per bushel for a $10 November soybean call. What is the time value of this option?
    • A. 

      25 cents per bushel

    • B. 

      90 cents per bushel

    • C. 

      There is no time value

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