Question 25

A corn farmer is using corn futures to hedge her crop production. Each Corn contract is for 5,000 bushels. She expects to harvest 200,000 bushels, but is uncertain of the exact amount so only sells 30 contracts (5,000 bushels per contract). She sells June futures contracts at $5.08/bu. At the time spot corn prices are $5.11/bu. At harvest time in late May spot corn is priced at $4.96/bu and she buys to close her contracts at $4.96/bu. If the farmer harvests and sells 200,000 bushels of corn at the late May spot price, what is the net price per bushel she will be selling at including the impact of his hedge?

$4.96

$4.98

$5.05

$5.11

$5.21

A corn farmer is using corn futures to hedge her crop production. Each Corn contract is for 5,000 bushels. She expects to harvest 400,000 bushels, but is uncertain of the exact amount so only sells 50 contracts (5,000 bushels per contract). What is the farmer's hedge ratio?

Group of answer choices

50%

60%

62.5%

75%

100%