Back To School With Ed Usset - Exam #2

6 Questions | Attempts: 577
Share
Quiz Flashcard
SettingsSettings
Please wait...
  • 1/6 Questions

    What does the term "backwardation" mean?

    • Corn prices are higher than wheat prices
    • The spot price of a commodity is higher than the price for future delivery
    • You live in a remote area with no internet access
Please wait...
About This Quiz

Welcome to the second exam in the "Back to School with Ed Usset" series! Thereare 6 questions to be answered and the answers and explanations will begiven to you at the very end. You have exactly one hour to completethis exam. You may not use any other material besides your memory toanswer these questions! No internet, no books, just what you learnedfrom what Ed Usset taught you in his previous lectures and quizes. Thisexam will be avaliable for one week before it is archived. At thattime, a new set of lectures and quizes will be avaliable from Ed Usset!

Good luck! :)

School Quizzes & Trivia

Quiz Preview

  • 2. 

    If you pay a premium of 37 cents per bushel for a $4.00 December corn put, what is the most money you can lose?

    • $4.00 per bushel

    • 37 cents per bushel

    • Your potential loss is unlimited

    Correct Answer
    A. 37 cents per bushel
    Explanation
    One of the main advantages to the purchase of options is that your potential losses are limited and measurable. If you pay 37 cents for a December 400 corn put – the right to sell December futures at $4 – the most money you can lose is the premium paid, or 37 cents per bushel.

    Rate this question:

  • 3. 

    Back to School #11: If you sell (or write) a $12 November soybean call option and receive a premium of 30 cents per bushel, what’s the most money you can lose?

    • $12 per bushel

    • 30 cents per bushel

    • Your potential loss is unlimited

    Correct Answer
    A. Your potential loss is unlimited
    Explanation
    Buying options is appealing because your risk is limited to the premium paid. But in this case you’re an option seller. Option sellers have a limited gain – limited to the size of the premium (30 cents per bushel in this example) – but their potential loss is unlimited.

    Rate this question:

  • 4. 

    Let’s say you pay 115 cents for a $10 November soybean put when the underlying futures price was $9.80 per bushel. Is this option…

    • In-the-money

    • Out-of-the-money

    • At-the-money

    Correct Answer
    A. In-the-money
    Explanation
    This option is 20 cents “in-the-money.” Put options are in-the-money when the strike price is higher than the underlying futures price. In this case, the put has a $10 strike price while the futures price is trading 20 cents lower, at $9.80.

    Rate this question:

  • 5. 

    Acres planted to corn have increased over the past 10 years. In 1999, there were 77 million acres planted to corn. The June acreage report indicated 2009 plantings closer to 87 million acres. Which state had the largest increase in corn acres between 1999 and 2009?

    • Iowa

    • Illinois

    • North Dakota

    • South Dakota

    Correct Answer
    A. Iowa
    Explanation
    All four of the states listed here increased corn acres by more than one million acres since 1999. Iowa had the largest increase with 1.6 million acres, but in terms of a percentage increase, North Dakota easily wins with almost 140% more acres this year vs. 1999. The next state in line with the greatest increase in corn acres was Kansas. Think about the large increase in corn acres in the Dakotas and Kansas, and you can picture the cornbelt creeping west into traditional wheat territory.

    Rate this question:

  • 6. 

    Just four commodities – corn, soybeans, wheat and hay – take up nearly 90% of acres planted to “principal crops.” As is true this year, corn is typically our most widely planted crop. This year USDA estimates nearly 50% more corn acres than wheat (87 vs 59 ma). Wow! What was the last year when total acres planted to wheat in the U.S. was higher than corn?

    • 1946

    • 1972

    • 1983

    • 1990

    Correct Answer
    A. 1990
    Explanation
    In 1990, U.S. farmers planted 77 million acres of wheat vs. 74 million acres of corn. I can find only 5 years in the past century when wheat acres topped corn acres and except for 1990, they all occurred in the 80’s.

    Rate this question:

Quiz Review Timeline (Updated): Mar 21, 2022 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2022
    Quiz Edited by
    ProProfs Editorial Team
  • Oct 07, 2009
    Quiz Created by
    Ed-usset
Back to Top Back to top
Advertisement
×

Wait!
Here's an interesting quiz for you.

We have other quizzes matching your interest.