QUESTION $3$

Consider a situation where you plan to trade a long$-$the$-$basis soybean position with these criteria:

You plan to buy soybeans during November at a basis of $-25$JAN.

You expect to sell soybeans during January at $+10$ MARCH.

The soybeans will be held approximately two months at a total cost$-$of$-$carry of $20.$

The only component not locked in is the spread. Calculate the outcome of the basis transaction in three different circumstance $s,$ each using the same criteria as shown above, but with these three different spread possibilities:

If you set the pre$-$spread from JAN to MARCH at a $15$ carry, what would your net margin be$?$

If you set the pre$-$spread from JAN to MARCH at a $25\%$ carry, what would your net margin be$?$

If you set the pre$-$spread from JAN to MARCH at a $30$ inversion, what would your net margin be$?$