The Health Food Corporation anticipates the need to purchase $80,000$ bushels of soybeans in six months to use in their products. The current cash price for soybeans is $$5\mathrm{.}50$ a bushel. A six$-$month futures contract for soybeans can be purchased at $$5\mathrm{.}53.$

Explain why Health Food Corporation might need to purchase futures contracts to hedge their position.

To completely hedge their exposure, how many contracts will they need to purchase? Soybeans trade in $5,000-$bushel contracts.

If the cash price of soybeans ends up at $$5\mathrm{.}75$ per bushel after six months, by how much will the actual cost of $80,000$ bushels of soybeans have gone up$?$

After the futures contracts are closed out $($sold at $$5\mathrm{.}75$ also$),$ what will be the gain on the futures contracts?

Considering the answers to parts c and d$,$ what is their net position?

If contracts are written on a $5,000-$bushel basis requiring $$3,000$ of margin and you control $12$ contracts:

How much would the price per bushel have to change to generate enough profit to purchase an additional contract?

You purchase a futures contract in euros for $$170,000.$ The trading unit is $125,000$ euros.

What is the ratio of cents to euros in this contract? $($Divide the dollar con$-$ tract size by the size of the trading unit.$)$

Assume you are required to put up $$4,000$ in margin and the euro increases by $3($per euro$).$

What will be your return as a percentage of margin?