Back To School With Ed Usset - Exam #2
Welcome to the second exam in the "Back to School with Ed Usset" series! There are 6 questions to be answered and the answers and explanations will be given to you at the very end. You have exactly one hour to complete this exam. You may not use any other material besides your memory to answer these questions! No internet, no books, just what you learned from what Ed Usset taught you in his previous lectures and quizes. This exam will be avaliable for one week before it is archived. At that time, a new set of lectures and quizes will be avaliable from Ed Usset!Good luck! :)
- 1.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?
- A.
$12 per bushel
- B.
30 cents per bushel
- C.
Your potential loss is unlimited
- 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?
- A.
$4.00 per bushel
- B.
37 cents per bushel
- C.
Your potential loss is unlimited
- 3.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?
- A.
Iowa
- B.
Illinois
- C.
North Dakota
- D.
South Dakota
- 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…
- A.
In-the-money
- B.
Out-of-the-money
- C.
At-the-money
- 5.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?
- A.
1946
- B.
1972
- C.
1983
- D.
1990
- 6.What does the term "backwardation" mean?
- A.
Corn prices are higher than wheat prices
- B.
The spot price of a commodity is higher than the price for future delivery
- C.
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