Crude oil contracts are 1 , 0 0 0 barrels, are quoted in dollars per barrel, and
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Question:
Crude oil contracts are barrels, are quoted in dollars per barrel, and the initial margin is per
contract. Soybean contracts are bushels, are quoted in cents per bushel, and have an initial margin of
$ Emini S&P contracts are quoted in S&P index value with a $ multiplier and have an
initial margin of $ per contract
Suppose that a farmer plants corn that will be sold in October.
a What is the farmers spot market position in corn?
b To hedge the corn sale in the spot market in October, what will be the farmers trades in
the futures market look like?
c If corn prices go up will the farmer make a profit or loss on his hedge position?
d Describe how the farmers futures markets trades hedge the spot market price of the
farmers corn
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