Grace is a growing coffee roaster in a robust market. In order to compete with the Big Four roasters, she decides to hedge future purchases. Today's Arabica coffee futures are trading at $1.12 per pound for delivery in March with a $0.58 basis on the local market. She likes that price and buys an Arabica contract (37,500 lbs.) on the NYMEX. March arrives and futures are actually $1.21 with nearby basis the same. Grace's broker completes the hedge by selling an offsetting futures contract a. What is the local price per pound that Grace will have to pay in March to buy the roasting beans she still needs?  

Answer rating: 100% (QA)

The local price for Graces coffee taking into account the hedge can be calcula... View the full answer