In the corn futures contract a number of different types of corn can be delivered (with price adjustments specified by the exchange) and there are a number of different delivery locations. Which of the following is true?

• a)This flexibility tends to decrease the futures price.
• b)This flexibility tends to increase the futures price.
• c)This has no effect on the futures price.
• d)This flexibility may increase and may decrease the futures price.

Question 2

On the floor of a futures exchange one futures contract is traded where both the long and short parties are closing out existing positions. What is the resultant change in the open interest?

• a)Decrease by two.
• b)Decrease by one.
• c)Increase by one.
• d)No change.