Business Math 7-1
today’s investigators have various investing options. one field of investment that can be very profitable in a short time is the worldwide commodities market. commodities are tangible items such as grains (wheat, corn, rice), beef, hogs, pork bellies, metals (gold, silver, copper), or agricultural products (soybeans, cotton, orange juice).
the commodities market is volatile: money can be made or lost quickly depending on unpredictable factors such as drought, flood, late or early frosts, hurricanes, workers’ strikes (mining, dock, or transportation), fuel price increases, fuel shortages, or political unrest. grain companies, ranchers, and meat-packing houses invest in specific products to use in their businesses to “lock in” the price ahead of time. for example, in february a rancher may invest in 10,000 bushels of may corn to feed the cattle all summer. the february price may be low because numerous acres of may corn may have been planted worldwide. by may, the price may have increased dramatically due to floods wiping out the u.s. corn crop. the rancher would have saved money by purchasing the needed corn at the lower price.
other commodities investors, like you, who may have no personal knowledge of the commodities, typically invest in futures. a futures investor buys the rights to purchase products that have not yet been produced at a specific price, with the hope that the price will increase before the investment is sold. because commodity figures are typically held less than a year before selling, a commodities market investor must be prepared to lose the entire investment in a short time, usually with no warning.
suppose that you invest $10,000 in an agricultural crop commodity today.
1. what commodity did you select? why?
2. use the internet to check today’s prices as listed in the u.s. department of agriculture’s crop reports at their worldwide website: www.usda.gov.
a. what is the price now?
b. what was the price a year ago?
c. if you bought the commodity one year ago at the price back then; then would you have made a profit or loss based on the price today?
d. for your profit or loss, write a sentence offering a possible explanation for the profit or loss?
3. research the benefits and risks associated with annuities. based on your research, select one particular type of annuity in which you might consider investing. describe why you have selected this annuity and how it fits into your personal financial picture. note: you do not need to disclose personal financial details, just be specific about how this annuity fits your plans.
· write your essay in this document. do not save it in a separate file.
· you must clearly state your position with well-structured paragraphs using proper grammar, spelling, and sentence structure.
· this is not an “opinion” question. you must offer evidence to support your position, using properly cited sources
· your answer must be between 150-250 words (about 1 page of text)
· you must cite at least one source (book, website, periodical) using apa format.
· do not use unreliable sources such as wikipedia™ or yahoo!® answers.