Question: Any help is much appreciated. 2. Hedge and store decision (with basis risk): Date Cash Futures 1-Oct Cash Price $2.30 May Futures $2.75 Cost of

Any help is much appreciated.

2. Hedge and store decision (with basis risk): Date Cash Futures 1-Oct Cash Price $2.30 May Futures $2.75 Cost of holding from Oct 1 to May 1 = $0.21 Expected Closing Basis = $0.15 (A) What is the expected profit margin? 1-Oct Sell May Futures @ $2.75 1-May Sell Cash @ $2.40 Buy May Futures @ $2.65 (B) What is the opening basis? (C) What is the actual closing basis? (D) What is the gain or loss on futures market result? = (D) What is the gain or loss on cash market result? = (E) What is the realized price (or net selling price)? = (F) What is the overall profit? =

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