You Hold One Long Corn Futures Contract That Expires in April.To

question 60

Multiple Choice

You hold one long corn futures contract that expires in April.To close your position in corn futures before the delivery date you must

• A) buy one May corn futures contract.
• B) buy two April corn futures contract.
• C) sell one April corn futures contract.
• D) sell one May corn futures contract.
• E) none of these.

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Definitions:

Financial Lease

A type of lease where the lessee has use of the asset for most of its useful life, and the lease payments are designed to cover the full cost of the asset, often with an option to purchase the asset at the end of the lease term.

Lessor

The party who rents or leases property to another; the owner of the property being rented or leased.

After-Tax Cost of Debt

The net cost to a company for borrowing funds after adjusting for the tax deductibility of interest payments.

Marginal Tax Rates

The rate at which the last dollar of income is taxed, thereby representing the rate of tax applied to each additional dollar of income.