Assume you are a Farmer, who must SELL Wheat. Assume you hedge your October 2 0 2
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Question:
Assume you are a Farmer, who must SELL Wheat. Assume you hedge your October harvest using October Wheat futures having a contract price of $ per bushel. You hedge bushels. Note assume NO wheat delivery. Answer as if cash payoff outcomes.
a What futures position should you take?
b Suppose Wheat in October ends up ONLY at $ per bushell. Calculate AND Explain your ending net overall revenue, again assuming you "get out just before the end" you do not do wheat delivery .
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Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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