QUESTION $1$ QUESTION $3$

The risk you want in merchandising is:

Basis risk.

Price risk.

Production risk.

All of the above.

QUESTION $4$

You must take physical possession of grain to complete a basis transaction.

True

False

QUESTION $5$

You must buy futures before you can sell futures.

True

False QUESTION $6$

You must own cash grain before you can sell cash grain.

True

False

QUESTION $7$

You must buy basis before you can sell basis.

True

False

QUESTION $8$

Two ways you can establish a long$-$the$-$basis position are to buy grain on forward contract and purchase physical inventory

across the scales.

True

False QUESTION $9$

Two ways you can establish a short$-$the$-$basis position are to sell grain on forward contract and sell unpriced $($DP$)$ grain in

inventory.

True

False

QUESTION $10$

The soybean futures contracts are trading as shown:

What is the NOV$/$MAR Spread?

$\mathrm{.}10$ carry

$\mathrm{.}17$ carry

$\mathrm{.}17$ inversion

$\mathrm{.}23$ inversionQUESTION $11$

The soybean futures contracts are trading as shown:

What is the JUL$/$AUG Spread?

$\mathrm{.}04$ carry

$\mathrm{.}12$ carry

$\mathrm{.}04$ inversion

$\mathrm{.}12$ inversion

QUESTION $12$

What is the cost$-$of$-$carry based on these factors:

$$5\mathrm{.}00$ cash wheat

$6\%$ real interest $(4\%$ interest $+2\%$ misc. costs$)$

Holding the wheat for $120$ days.

Enter answer in this three character format $\mathrm{.}00$

$\mathrm{.}025$

$\mathrm{.}10$

$\mathrm{.}125$

$\mathrm{.}36$

The term Long$-$the$-$Basis refers to:

A type of merchandising position in which you buy cash grain and immediately resell it$.$

A type of merchandising position in which you have ownership of cash grain, are hedged with long futures and waiting for a

sale to be made at a higher basis later.

A type of merchandising position in which you have sold cash grain, are hedged with long futures and waiting for the basis to

move lower.

A type of merchandising position in which you have ownership of cash grain, are hedged with short futures and waiting for a

sale to be made at a higher basis later.

QUESTION $2$

The objective of being short$-$the$-$basis is to:

Purchase cash grain when the basis is weak, buy futures to protect against price risk and wait until a sale can be made at a

higher basis later.

Purchase cash grain when the basis is weak, carry a short futures position to protect against price risk and wait until a sale

can be made at a higher basis later.

Establish a sale when the basis is high, carry a long futures position to protect against price risk and wait to buy the bushels

at a lower basis later.

Establish a sale when the basis is high, carry a short futures position to protect against price risk and wait to purchase the

bushels at a lower basis later.