AFM Agricultural Management & Operations 5

Question 1

A farm manager calculates a current ratio of 0.85 for the operation. What does this indicate?

Accepted Answer

Current liabilities exceed current assets, indicating potential cash flow problems

Answer

A current ratio below 1.0 means current liabilities exceed current assets, signaling the farm may struggle to meet short-term obligations.

Question 2

Which cover crop species is MOST commonly used to fix atmospheric nitrogen and improve soil fertility for a following corn crop?

Accepted Answer

Hairy vetch (Vicia villosa)

Answer

Hairy vetch is a legume that fixes 80–200 lbs of nitrogen per acre and is widely used as a nitrogen-building cover crop ahead of corn.

Question 3

Under the Farm Credit System, which institution type is specifically designed to make long-term real estate mortgage loans to farmers?

Accepted Answer

Farm Credit Banks (FCBs)

Answer

Farm Credit Banks (and their predecessor Federal Land Banks) specialize in long-term agricultural real estate mortgage lending within the Farm Credit System.

Question 4

A soybean field shows widespread interveinal chlorosis on young leaves while older leaves remain green. Which nutrient deficiency is MOST likely?

Accepted Answer

Iron (Fe) deficiency (iron deficiency chlorosis)

Answer

Iron deficiency chlorosis causes interveinal yellowing on young leaves because iron is immobile in plants and deficiency appears first in new growth.

Question 5

Which marketing strategy involves a farmer agreeing to sell grain at a set price before harvest, eliminating price risk but retaining basis risk?

Accepted Answer

Hedge-to-arrive (HTA) contract

Answer

A hedge-to-arrive (HTA) contract locks in the futures price component but leaves the basis open to be set later, so basis risk remains.

(AFM) Accredited Farm Manager Certification Practice Test

(AFM) Accredited Farm Manager Certification Practice Test

AFM Agricultural Management & Operations 5