el, and September futures are trading at $5.66 per bushel. What approximate purchase price per bushel (FOB the Gulf) can you lock-in for wheat by hedging with the purchase of futures? Assume 1 cent per bushel brokerage fees. a) 6.35 b) 6.31 c) 6.33 d) 6.34
el, and September futures are trading at $5.66 per bushel. What approximate purchase price per bushel (FOB the Gulf) can you lock-in for wheat by hedging with the purchase of futures? Assume 1 cent per bushel brokerage fees. a) 6.35 b) 6.31 c) 6.33 d) 6.34
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You are a buyer for a wheat importer based in Mexico. You estimate your buying basis for wheat FOB the Gulf of Mexico (i.e., loaded onto a ship) will be 68 cents over in May and June ($0.68). July wheat futures are trading at $5.64 per bushel, and September futures are trading at $5.66 per bushel. What approximate purchase price per bushel (FOB the Gulf) can you lock-in for wheat by hedging with the purchase of futures? Assume 1 cent per bushel brokerage fees.
a) 6.35
b) 6.31
c) 6.33
d) 6.34
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