A farm that produces corn is looking to hedge their exposure to price fluctuations in the future. It is now May 15th and they expect their crop to be ready for harvest September 30th. You have gathered the following information: Bushels of corn they expect to produce 44,000 May 15th price per bushel $3.08 Sept 30 futures contract per bushel $3.22 Actual market price Sept 30 $3.37 Required (round to the nearest dollar): Calculate the gain or loss on the futures contract and net proceeds on the sale of the corn. Net gain or loss on future $Answer Sell the corn $Answer Net $Answer
A farm that produces corn is looking to hedge their exposure to price fluctuations in the future. It is now May 15th and they expect their crop to be ready for harvest September 30th. You have gathered the following information: Bushels of corn they expect to produce 44,000 May 15th price per bushel $3.08 Sept 30 futures contract per bushel $3.22 Actual market price Sept 30 $3.37 Required (round to the nearest dollar): Calculate the gain or loss on the futures contract and net proceeds on the sale of the corn. Net gain or loss on future $Answer Sell the corn $Answer Net $Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A farm that produces corn is looking to hedge their exposure to price fluctuations in the future. It is
now May 15th and they expect their crop to be ready for harvest September 30th.
You have gathered the following information:
Bushels of corn they expect to produce 44,000
May 15th price per bushel $3.08
Sept 30 futures contract per bushel $3.22
Actual market price Sept 30 $3.37
Required (round to the nearest dollar):
Calculate the gain or loss on the futures contract and net proceeds on the sale of the corn.
Net gain or loss on future $Answer
Sell the corn $Answer
Net $Answer
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