In the Corn Futures Contract, a Number of Different Types

question 1

Multiple Choice

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? choose one

• A) This flexibility tends to increase the futures price.
• B) This flexibility tends to decrease the futures price.
• C) This flexibility may increase and may decrease the futures price.
• D) This has no effect on the futures price.

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Definitions:

Futures Position

An investment strategy involving contracts for the purchase or sale of assets at a future date at a price specified today.

Closed Out

The process of finalizing all positions in a security or contract, effectively ending all obligations or engagements in those positions.

Hedge

An investment position intended to offset potential losses or gains that may be incurred by a companion investment, a common risk management strategy.

Speculator

An investor who engages in the buying and selling of financial instruments with the aim of profiting from short-term market fluctuations.