Reading 39: Commodity Forwards and Futures- LOS b(part2)~ regarding, following, statements, 2009, name

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LOS b, (Part 2): Identify and explain the arbitrage situations which arise as a result of the convenience yield of commodity spreads.

Q1. Which of the following statements regarding commodity spreads is least accurate?

A)   A trader creates a crush spread by holding a long position in soybeans and a short position in soybean meal and soybean oil.

B)   A commodity spread results from a commodity that is an input in the production process of other commodities.

C)   The difference in prices of crude oil, heating oil, and gasoline is known as a crush spread.

 

Q2. A trader in soybean futures contracts has discovered an arbitrage opportunity involving soybean futures and futures on soybean meal and soybean oil. Of the following, this most likely can occur with a:

A)   crack spread by holding a long position in soybeans and a long position in soybean meal and short position in soybean oil.

B)   crush spread by holding a short position in soybeans and a long position in soybean meal and soybean oil.

C)   crack spread by holding a long position in soybeans and a long position in soybean meal and soybean oil.

rawrdinosaur

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luqian55

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