eter is a wheat farmer who is concerned with the future decrease in wheat prices. He plans to sell 250,000 bushels of wheat. Additionally, he takes a short position (sells) fifteen wheat contracts to take advantages of future increase in prices. Details of the wheat contract include: Contract size: 5,000 bushels Current (spot) price: $0.80 per bushel Futures price: $0.83 per bushel Calculate his net profit/loss if the price of wheat is $0.78 per bushel at expiration. $201,750 $198,750 $195,000 $189,750
eter is a wheat farmer who is concerned with the future decrease in wheat prices. He plans to sell 250,000 bushels of wheat. Additionally, he takes a short position (sells) fifteen wheat contracts to take advantages of future increase in prices. Details of the wheat contract include: Contract size: 5,000 bushels Current (spot) price: $0.80 per bushel Futures price: $0.83 per bushel Calculate his net profit/loss if the price of wheat is $0.78 per bushel at expiration. $201,750 $198,750 $195,000 $189,750
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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Peter is a wheat farmer who is concerned with the future decrease in wheat prices. He plans to sell 250,000 bushels of wheat. Additionally, he takes a short position (sells) fifteen wheat contracts to take advantages of future increase in prices. Details of the wheat contract include:
- Contract size: 5,000 bushels
- Current (spot) price: $0.80 per bushel
- Futures price: $0.83 per bushel
Calculate his net
$201,750 |
||
$198,750 |
||
$195,000 |
||
$189,750 |
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