Question: A futures contract on some commodities may be delivered using any of several different types of corn and there are several delivery locations. In such
A futures contract on some commodities may be delivered using any of several different types of corn and there are several delivery locations. In such cases the price is adjusted by the exchange for the different types of corn.
Part a. Explain who decides which type of corn to deliver.
Part b. Explain which position benefit from the flexibility, the short or the long position?
Part c. Is a higher price more attractive to the short or long position?
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