In the Corn Futures Contract a Number of Different Types

question 8

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

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

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Definitions:

Exports

Goods or services sent from one country to another for sale or trade.

Quota

A trade limitation enforced by the government, restricting the quantity or financial value of products that can be exported or imported over a set timeframe.

Open-Economy Model

An economic model that considers the impact of trade and financial flows with other countries on the domestic economy.

Net Exports

The disparity between the total amount a country exports and the total amount it imports.