1. Farm Management 2011 MC Non-Math

2. 3. A township is six miles square and includes A. 6 sections. B. 36 sections. C. 40 sections. D. 160 sections. E. None of the above B

3. 4. The main difference between a joint tenancy and tenancy in common is A. the surviving joint tenant will eventually own all of the land as a result of right of survivorship. B. the surviving tenant in common will eventually own all the land as a result of right of survivorship. C. only husbands and wives may be joint tenants. D. tenants in common must own equal shares of the property while joint tenants may own unequal shares (i.e., H owns 1/4 and W owns 3/4). E. None of the above A

4. 5. Cooperatives pay patronage refunds according to A. one man, one vote. B. size of farm. C. amount of business done by patron. D. total assets. E. All of the above C

5. 10. Due to a sharp increase in hog numbers, average hog prices were much lower in 2008 than in 2007. Demand for corn to feed to hogs _____________ in 2008 compared to 2007. A. increased B. decreased C. did not change A

6. 16. A charge for capital used in a farmer's cattle herd is usually included in an enterprise budget regardless of whether he borrowed money to buy the cows or not. This illustrates the principle of A. marginal cost. B. fixed cost. C. opportunity cost. D. variable cost. E. alternative cost. C

7. 21. For tax year 2010, the social security wage base was A. $102,000 B. $106,800 C. $108,600 D. $110,100 E. None of the above B

8. 22. For an individual under age 50, the maximum allowable IRA contribution and deduction in 2010 was A. $1,000 B. $2,000 C. $3,000 D. $5,000 E. None of the above D

9. 23. The present value formula for estimating land prices (PV = annual net returns ÷ discount rate) assumes A. future prices and yields can be estimated accurately. B. the discount rate is appropriate. C. income will continue to infinity. D. net income will not trend up or down. E. All of the above E

10. 24. The type of life insurance which provides protection for a limited time and is usually cheaper per dollar of protection is called A. whole life. B. term. C. endowment. D. new life. E. universal life. B

11. 25. The net business profit for a year would be found on A. the balance sheet. B. the cash flow budget. C. the income statement. D. a partial budget. E. None of the above C

12. 26. The turnover ratio is calculated by dividing __________ by average total assets. A. total sales B. beginning inventory C. value of farm production D. net farm income E. None of the above C

13. 28. A farmer is "liquid" if A. he has sufficient current assets to cover current debts. B. he has sufficient equity to cover current debts. C. he has sufficient assets to cover all debts. D. he can pay all debts with all equity. E. None of the above A

14. 29. Increasing leverage during a period when a farm's percent return to total capital is less than the interest rate will mean A. higher returns to equity. B. lower returns to equity. C. lower risk. D. lower gross income. E. None of the above B

15. 30. A constant payment loan with payments consisting of principal and interest is called A. an amortized loan. B. a complementary loan. C. a discounted loan. D. a fixed rate loan. E. a capital loan. A

16. 32. If the price of a commodity increases by 5% and the quantity purchased decreases by 10%, then the demand for this commodity is A. upward sloping. B. inelastic. C. elastic. D. unitary. E. unstable. C

17. 33. Changes in price within a year which tend to follow the same pattern over time are called A. price cycle. B. price seasonality. C. price volatility. D. price discrimination. E. None of the above B

18. 34. A marketing function which tends to regulate the supply of a product and provide a stable market price is A. transporting. B. processing. C. grading. D. storing. E. None of the above D

19. 35. Which one of the following would cause an increase in the price of an agricultural commodity? A. An increase in supply and a decrease in demand B. A decrease in supply with no change in demand C. A decrease in demand with no change in supply D. All of the above would cause price to increase E. None of the above B

20. 36. If the price of a commodity is too high, the supply will be greater than the demand resulting in a A. surplus. B. boycott. C. monopoly. D. shortage. E. None of the above A

21. 37. A trader with a short position in the futures market A. profits when prices go down; loses when prices go up. B. profits when prices go neither up nor down. C. profits when prices go up; loses when prices go down. D. cannot lose money. E. None of the above A

22. 38. The main reason for hedging is A. to make more profit. B. to insure against a production loss. C. to reduce the price risk associated with producing or storing a cash commodity. D. to take an opposite position from the speculator. E. None of the above C

23. 39. A farmer who buys feeder pigs could use the options market to reduce his price risk by A. buying a hog Put option. B. selling a hog Put option. C. buying a hog Call option. D. selling a hog Call option. E. All of the above A

24. 40. If a farmer purchased land for $160,000, has a loan of $100,000 remaining on the land, and the market value of the land is $200,000, the book value of the land on the balance sheet will be A. $40,000. B. $60,000. C. $100,000. D. $160,000 less any accumulated depreciation. E. None of the above D