Please SHOW YOUR WORK 1. On October 1, an elevator who holds soybeans, fears its price decrease due to reports of big crop in Brazil. He did the following calculation and trades in both the cash and futures markets on October 1 and May 10. Please fill in blanks in the table. Assume there is no basis risk and the basis did not change in the whole process Date Cash Futures 1-Oct Cost of Production $6.00 May Futures $6.40 Expected Basis -$0.30 (A) What is the forward price? = (B) What is the expected profit margin?, 1-Oct Sell May Futures @ $6.40 10-May Sell Cash @ $5.70 Buy May Futures @ 2 (C) What is futures price on May 10th? (D) What is the gain or loss on futures market result? = (E) What is the gain or loss on cash market result? = (F) What is the realized price for net selling price)? = (G) What is the overall profit? = 2. Long Hedge: A cattle producer bought the input from the market. The expected basis equals -5.40 (no basis risk, actual basis equals the expected basis) Date Cash Futures 1-Feb Estimated Purchased Costs $3.00 Oct Futures $3.25 (A) What is the forward price? = (B) What is the expected profit margin? 1-Feb Buy Oct Futures @ $3.25 10-Oct Buy Cash @ $3.25 Sell May Futures @ (C) What is futures price on Oct 10th? = (D) What is the gain or loss on futures market result? (E) What is the gain or loss on cash market result? = (F) What is the realized price (or net buying price)? - (G) What is the overall profit? =