Question 333 pts

When a trader "rolls" their position, what are they likely doing?

Group of answer choices

Using a spread strategy to bet on basis differentials between two contracts.

Adding to an outstanding long in an existing contract.

Adding variation margin to their account to maintain a speculative position in a contract.

Moving a hedge from a near term expiring contract to a longer dated contract.

Question 343 pts

Assume a corn farmer expects to harvest 1 million bushels of corn. To hedge the price risk on their corn they sell 200 corn contracts (assume 5,000) bushels per contract. At harvest time there has been a drought and they are only able to harvest 800,000 bushels of corn. This is an example of:

Group of answer choices

basis risk.

liquidity risk.

margin risk.

quantity risk.