QUESTION 8

A farmer places a hedge at Time 1. The price of the futures contract at Time 1 was 781 and the farmer expected basis at Time 2 to be -37. At Time 2, the futures price is 757 and the basis is -39 . What is the cash price at Time 2?

		796
		718
		720
		742

QUESTION 9

In June, Farmer Jones is looking at futures prices and considering using a hedge to lock in a price on part of his soybean crop. He sees that the November futures contract is trading at $16.20/bushel and he knows that basis in October (when he expects to deliver and sell his beans and lift the hedge) is usually 30 cents under. When Time 2 arrives and he exits the hedge, basis is 26 under. What net price does he receive?

		15.94/bu
		$15.90/bu
		$15.86/bu
		$16.04/bu

QUESTION 10

A farmer might consider a storage hedge if

		there is a normal forward curve
		the futures market is in backwardation
		the farmer has no on-farm storage and will use commercial storage at the elevator
		there is an inverted forward curve

QUESTION 11

When a trader receives a margin call

		they have to send enough money immediately to bring the margin back up to the maintenance margin level
		within 7 business days they have to send enough money to bring the margin back up to the initial margin level
		they have to send enough money immediately to bring the margin back up to 110% of the initial margin level
		they have to send enough money immediately to bring the margin back up to the initial margin level