Assume you are a corn farmer, and you want to lock in a price for part of your upcoming harvest. You see that the December futures contracts are currently trading at $7.10/bu, and you anticipate basis to be 5-0.05/ba. What is your anticipated hedge price?

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 3BIC
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Assume you are a corn farmer, and you want to lock in a price for part of your upcoming harvest. You see that the December
futures contracts are currently trading at $7.10/bu, and you anticipate basis to be $-0.05bu. What is your anticipated hedge price?
Your Answer:
Answer
units
Transcribed Image Text:Assume you are a corn farmer, and you want to lock in a price for part of your upcoming harvest. You see that the December futures contracts are currently trading at $7.10/bu, and you anticipate basis to be $-0.05bu. What is your anticipated hedge price? Your Answer: Answer units
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