GSC ABC School: Position Reports

10 Questions | By Cooperlatham | Updated: Mar 20, 2022 | Attempts: 91

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Chapter 5

Questions and Answers

1.

What is the term for when a firm takes a long or short position in futures ahead of an anticipated cash transaction?
- A.
  
  Futures exchange
- B.
  
  Prehedge
- C.
  
  Spread
2.

Which factor has reduced but not eliminated the use of prehedging?
- A.
  
  Mini contracts
- B.
  
  Unpredictable weather
- C.
  
  The "cloud"
- D.
  
  Overnight electronic trading
3.

Each of the major types of risk are unaffected by futures market movement
- A.
  
  True
- B.
  
  False
4.

A key component of managing risk is to keep track of all company positions including inventory, purchases, sales, and hedges.
- A.
  
  True
- B.
  
  False
5.

A report for management which purpose is to provide information on the company's exposure to price and basis risk is known as what?
- A.
  
  Equity run
- B.
  
  Monthly statement
- C.
  
  Report card
- D.
  
  Position report
6.

Which of the following is NOT a function of the merchandising position log?
- A.
  
  To be a permanent, centralized record of all priced long/short transactions
- B.
  
  To help you in tracking current and future market movement
- C.
  
  To keep your price-risk position "up to the minute"
- D.
  
  To serve as a cross-check to the daily position report, calculated the "standard" way
7.

Which of the following choices are some of the fundamental objectives of a grain merchandiser?
- A.
  
  Get rich by any means necessary
- B.
  
  To shield his/her business from losses due to price risk
- C.
  
  To increase his/her profit margins by capitalizing on favorable basis movements
- D.
  
  Buy high, sell low
8.

Which of the following does have basis risk?
- A.
  
  Delayed price (DP) inventory
- B.
  
  HTA contracts
- C.
  
  Grain with storage obligations against it
- D.
  
  All of the above
- E.
  
  None of the above