Quaker Mills projects that they need to buy two million bushels of oats in June for the

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Question:

Quaker Mills projects that they need to buy two million bushels of oats in June for the production of breakfast cereal that month, Suppose that the current data is April 1.

Currently, the CBOT. Which of the following are features of a good hedging strategy that Quaker Mills should adopt? Assume that oats are deliverable under this contract

A. Take a long position in soybean futures.

B. Use futures with a December delivery month.

C. Close out the hedge in June immediately after purchasing the oats in the spot market.

D. Take a short position in July oats futures.

E. All of the above.