You expect to deliver 45,000 bushels of wheat to the market in July. Assume you hedged your
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Question:
You expect to deliver 45,000 bushels of wheat to the market in July. Assume you hedged your position byselling futures contracts on half of your expected delivery at a price of 7.135. The futures contracts are based on5,000 bushels and are priced in cents per bushel. Assume the market price turns out to be 7.140 when you actuallydeliver the wheat. How much more or less would you have earned if you had not bought the futures contracts?
A.$80 less
B.$112.50 less
C.Neither more nor less
D.$112.50 more
E.$80 more
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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