GSC ABC School: Merchandising

10 Questions | By Cooperlatham | Last updated: Mar 21, 2022 | Total Attempts: 76

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Chapter 4

Questions and Answers

1.

Which of the following choices could help to increase your margins on grain sales?
- A.
  
  Sell in volume
- B.
  
  Price in volume
- C.
  
  Price by futures exchange/VS cash
- D.
  
  All of the above
2.

The cost of carry is the cost for a grain elevator to take ownership of grain inventory and hold it.
- A.
  
  True
- B.
  
  False
3.

Which of the following is the correct Cost-To-Carry formula?
- A.
  
  (Value + Interest Rate)/360 + Time(days)
- B.
  
  (Value - Interest Rate)/360 - Time(days)
- C.
  
  (Value X Interest Rate)/360 X Time(days)
- D.
  
  (Value / Interest Rate)/360 / Time(days)
4.

If value equals $3.50, the interest rate is 6%, and time of ownership is 30 days, what is the cost of carry?
- A.
  
  0.0145 dollars per bushel
- B.
  
  0.0155 dollars per bushel
- C.
  
  0.0165 dollars per bushel
- D.
  
  0.0175 dollars per bushel
5.

If value equals $4.50, the interest rate is 8%, and time of ownership is 60 days, what is the cost of carry?
- A.
  
  0.05 dollars per bushel
- B.
  
  0.06 dollars per bushel
- C.
  
  0.07 dollars per bushel
- D.
  
  0.08 dollars per bushel
6.

If value equals $4.00, the interest rate is 7%, and time of ownership is 90 days, what is the cost of carry?
- A.
  
  0.06 dollars per bushel
- B.
  
  0.07 dollars per bushel
- C.
  
  0.08 dollars per bushel
- D.
  
  0.09 dollars per bushel
7.

The basis level sufficient to allow moving grain into or out of a futures delivery position is known as what?
- A.
  
  Cost to carry
- B.
  
  Merchandising cost
- C.
  
  Honey Boo Boo value scale
- D.
  
  Delivery value equivalent
8.

All US agricultural crop futures contracts are settled in which of the following way(s)?
- A.
  
  By delivery of the underlying physical commodity, via "shipping certificates" or warehouse receipts
- B.
  
  By telling GSC, "Gimme my money!"
- C.
  
  By offset via an identical futures contract (same exchange and same month)
9.

The basis trader's profit margin is made up primarily of which of the following?
- A.
  
  Weather
- B.
  
  The buy basis
- C.
  
  Futures spreads
- D.
  
  The sell basis
- E.
  
  USDA crop reports
- F.
  
  The cost of carry
10.

If the premium to futures charge is 4 cents, and freight from Chicago to the New Orleans area is around 30 cents, what will the delivery value equivalent of grain delivered be? This number is sometimes called "freight off delivery"