Question: Can someone answer these questions and briefly explain hedging? 1. Farmer Jane wants to grow corn. It costs Jane $2.85 to grow one bushel of

Can someone answer these questions and briefly explain hedging?

Can someone answer these questions and briefly explain hedging? 1. Farmer Jane

1. Farmer Jane wants to grow corn. It costs Jane $2.85 to grow one bushel of corn. She estimates that her total crop will be 100,000 bushels and will be ready to sell in September. September corn is trading at 315 cent per bushel. Farmer Jane decides to hedge her crop. a. What transaction should she make in the futures market now? In September corn is trading at 280 cents per bushel. Farmer Jane offsets her futures position and sells in the cash market at $2.65/bushel. Assume no commission b. What is Farmer Jane's profit or loss in the futures markets? c.What is her total profit or loss

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