QUESTION $13$ QUESTION $16$

Prior to harvest you set a pre$-$spread in anticipation of buying $100,000$ bushels of wheat during June basis the JUL futures and

selling it in October basis the DEC futures at a spread of $.20$ carry.

You purchase $100,000$ bushels of wheat during harvest at $+5$JUL and execute the appropriate futures transaction.

What is your open futures position after these transactions are completed?

Short $20$JUL

Long $20$ DEC $/$ Short $20$ JUL

Long $20$ DEC

Short $20$ DEC

QUESTION $17$

Late in May $($prior to harvest$)$ you make a sale of $100,000$ bushels of wheat on a forward contract with a buyer at $+20$ DEC for

October delivery.

The sale is priced with the buyer and you purchase DEC futures.

In June $($harvest$)$ you purchase $100,000$ bushels of wheat at a basis of $-20$JUL which you will later deliver to the buyer.

As you purchase wheat from the farmers you sell JUL futures.

What must you do to complete this transaction?

Buy $20$JUL futures.

Buy $20$ JUL futures $/$ Sell $20$ DEC futures.

Buy $20$ DEC futures $/$ Sell $20$ JUL futures.

Buy $20$ DEC futures. QUESTION $18$

You have the opportunity to trade a Long$-$the$-$Basis wheat position by setting a buy basis of $-35$JUL and later selling the wheat in

December at an expected basis of $+10$ MAR.

Which of the following pre$-$spreads would you want to set to put you in the best long$-$the$-$basis position?

Buy JUL $/$ Sell MAR at $25$ carry

Buy MAR $/$ Sell JUL at $15$ carry

Buy JUL $/$ Sell MAR at $20$ inversion

Buy MAR $/$ Sell JUL at $10$ c inversion

QUESTION $19$

You make at sale at $+30$ MAR which establishes a new short$-$the$-$basis position. You later spread long futures to the JUL at a $\mathrm{.}05$ carry.

What is your adjusted sell basis?

$+5$ JUL

$+25$ JUL

$+30$ JUL

$+35$ JUL

QUESTION $20$

You make a sale of soybeans at $+5$JUL which establishes a new short$-$the$-$basis position. You later spread your long futures to the

NOV at a $$1\mathrm{.}00$ inversion. What's your adjusted sell basis?

$+5$ NOV

$+95$ NOV

$+100$ NOV

$+105$ NOV QUESTION $21$

You have ownership of soybeans at $-40$ NOV.

The spread is set from NOV$/$MAR at a $\mathrm{.}25$ carry.

Cost of carry to hold beans for $4$ months totals $.20.$

Freight to the buyer is $\mathrm{.}15.$

What basis would you offer to sell beans to a buyer if you wanted to make a net margin of $35$ bushel $($net margin being the profit you

make after paying cost$-$of$-$carry and freight$)?$

$-30$ MAR

$-10$ MAR

$+0$ MAR

$+5$ MAR

QUESTION $22$

Prior to harvest you forward contract $50,000$ bushels of corn from farmers at a basis of $-15$ MAR for direct delivery to a Processor

in January.

At the end of November the spread from DEC to MAR was $10$ carry.

In December you make a sale to the processor for $50,000$ bushels of corn at $+20$ MAR for January delivery.

In January, the producer delivers corn to the processor against his forward contract.

What is the margin on this basis transaction?

$5$ loss

$25$ profit

$35$ profit

$45$ profit

The buy side of a pre$-$spread is:

The futures month against which the cash grain is expected to be purchased.

The calendar month in which the cash grain is expected to be purchased.

The calendar month in which the cash grain is expected to be sold.

The futures month against which the cash grain is expected to be sold.

QUESTION $14$

The sell side of a pre$-$spread is:

The futures month against which the cash grain is expected to be purchased.

The calendar month in which the cash grain is expected to be purchased.

The calendar month in which the cash grain is expected to be sold.

The futures month against which the cash grain is expected to be sold.

QUESTION $15$

You purchase $100,000$ bushels of wheat in June and hedge it with the proper futures transaction securing an average buy basis

of $-40$JUL.

You later set a spread by buying $20$ JUL contracts and selling $20$ MAR contracts at a $\mathrm{.}35$ carry.

What is your open futures position after these transactions are completed?

Long $20$JUL

Long $20$ JUL $/$ Short $20$ MAR

Long $20$ MAR $/$ Short $20$ JUL

Short $20$ MAR