which of the following is false regarding a futures market
1. which of the following is false regarding a futures market?
A. one of the most important roles of a futures market is to provides a means to buy or sell physical commodities?
B price discovery is one of the three primary roles of futures market exchanges?
C. most of the people who trade futures are speculators?
D. most futures contracts are closed by buying/selling with an offsetting trade.
3. futures markets can be used to reduce commodity price risk becase:
A. futures and cash respond to the same apply and demand facts.
B. futures and cash prices move in opposite directions and therefore offset each other.
C. the cash price is always the same as the futures price.
D. All of the above.
5. In march, the manager of a grain elevator buys corn on the cash market. he plans to store the corn over the next 4 months and then sell it in july. in order to hedge the corn he is storing, he should:
A. buy a july corn contract in march.
B. sell a july corn contract in march.
C. buy a july contract in july.
D. Sell a march contract in march.
7. if too much rain falls during the soybeans growing season in brazil and argentina and ruins the south american crop prospects, which of the following is most likely to occur in the futures and cash markets for soybeans:
A. the future price will increase and the cash price will remain stable.
B. the future price will increase and the cash price will increase.
C. the future price will decrease and the cash price will decrease.
D. the futures price will decrease and the cash price will increase.
9. In december, a cereal manufacturer buys a may sugar contract for $0.2125 per pound. in May, he offets his futures hedge for $0.2500 per pound. at the same time, he buys his sugar for manufacturing on the cash market from his usual supplier for $0.2450 per pound. accounting for profit/loss in the futures market, what is the net price per pound he pays for sugar.
.2125, .2075, .2500, or .2825 per pound?
a producer will alaways make more money if he/she hedges than if he/she did not hedge. true or false?
futres markets can be used by hedgers willing to take large amount of risk? true or false.
and just a general question. if you want to reduce a prise risk, do you buy or sell a futures contract hoping that price for a contract doesnt fall anymore?
1. which of the following is false regarding a futures market?
A. one of the most important roles of a futures market is to provides a means to buy or sell physical commodities?
B price discovery is one of the three primary roles of futures market exchanges?
C. most of the people who trade futures are speculators?
D. most futures contracts are closed by buying/selling with an offsetting trade.
3. futures markets can be used to reduce commodity price risk becase:
A. futures and cash respond to the same apply and demand facts.
B. futures and cash prices move in opposite directions and therefore offset each other.
C. the cash price is always the same as the futures price.
D. All of the above.
5. In march, the manager of a grain elevator buys corn on the cash market. he plans to store the corn over the next 4 months and then sell it in july. in order to hedge the corn he is storing, he should:
A. buy a july corn contract in march.
B. sell a july corn contract in march.
C. buy a july contract in july.
D. Sell a march contract in march.
7. if too much rain falls during the soybeans growing season in brazil and argentina and ruins the south american crop prospects, which of the following is most likely to occur in the futures and cash markets for soybeans:
A. the future price will increase and the cash price will remain stable.
B. the future price will increase and the cash price will increase.
C. the future price will decrease and the cash price will decrease.
D. the futures price will decrease and the cash price will increase.
9. In december, a cereal manufacturer buys a may sugar contract for $0.2125 per pound. in May, he offets his futures hedge for $0.2500 per pound. at the same time, he buys his sugar for manufacturing on the cash market from his usual supplier for $0.2450 per pound. accounting for profit/loss in the futures market, what is the net price per pound he pays for sugar.
.2125, .2075, .2500, or .2825 per pound?
a producer will alaways make more money if he/she hedges than if he/she did not hedge. true or false?
futres markets can be used by hedgers willing to take large amount of risk? true or false.
and just a general question. if you want to reduce a prise risk, do you buy or sell a futures contract hoping that price for a contract doesnt fall anymore?
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