Question: 1. What is the largest negative cash flow which the firm will face per bushel once the hedge is in place?2. What is the lowest

1. What is the largest negative cash flow which the firm will face per bushel once the hedge is in place?2. What is the lowest per bushel ending price at which the firm would be exercising the futures option as part of the hedge strategy?

The management team must buy 100,000 bushels of corn on May 15th in order to meet production needs for pending deliveries. The team decides to use the June 2021 futures options which trade through May 21, 2021. An at-the-money call option with a strike price of 530 cents per bushel and a premium per unit of 30 cents is selected. It is noted that each futures option contract covers 5,000 bushels

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