Suppose today is December 4, 2020, and your firm produces breakfast cereal and needs 160,000 bushels of corn in March 2021 for an upcoming promotion. You would like to lock in your costs today because you are concerned that corn prices might go up between now and March. Use Table 25.2a. What is the total price you are locking in for the 160,000 bushels of corn based on the day’s closing price? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)b. Suppose corn prices are $4.66 per bushel in March. What is the profit or loss on your futures position? (Enter your answer as a positive value. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)| a. | Total cost ||------|---------------------------------|| b. | Profit or loss on futures | ## Futures Contracts Overview### Metal & Petroleum Futures#### Copper-High Grade (COMEX)- *December*: Open 3.5090, High 3.5240, Low 3.4900, Close 3.5005- *March*: Open 3.4860, High 3.5160, Low 3.4610, Close 3.4900- *May*: Close 3.4680 with Change +0.0115- Open Interest: 162,639 for December, 104,897 for March#### Gold (COMEX)- *December*: Open 1846.00, High 1848.50, Low 1823.00, Close 1840.00- *February*: Close 1840.00 with Change +6.20- Open Interest: 214,615 for December, 413,628 for February#### Crude Oil-WTI (NYMEX)- *January*: Open 45.52, High 46.26, Low 44.96, Close 46.09- Change: +0.62 with Open Interest of 406,869### Interest Rate Futures#### Ultra Treasury Bonds (CBT)- *December*: Open 211-11, High 212-12, Low 211-04, Close 212-06- Change: +1-19 with Open Interest 580#### 2-Year U.S. Treasury Notes (CBT)- *December*: Open 110.125, High 110.133, Low 110.121, Close 110.133### Agriculture Futures#### Corn (CBT)- *December*: Open 422.75, High 427.25, Low 422.50, Close 425.50- *March*: Close 429.75 with Change +2.75#### Soybeans (CBT)- *January*: Open 1153.50, High 1161.00, Low 1150.25, Close 1156.25- Change: +2.75 with Open Interest 193,449### Currency Futures#### Japanese Yen (CME)- *December*: Open 0.009634, High 0.009640, Low 0.009627, Close 0.009639- Change: +0.

Future contract is a derivative contract that is used for hedging by business firms. It allows the…

Suppose today is December 4, 2020, and your firm produces breakfast cereal and needs 160,000 bushels of corn in March 2021 for an upcoming promotion. You would like to lock in your costs today because you are concerned that corn prices might go up between now and March. Use Table 25.2 a. What is the total price you are locking in for the 160,000 bushels of corn based on the day's closing price? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. Suppose corn prices are $4.66 per bushel in March. What is the profit or loss on your futures position? (Enter your answer as a positive value. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a. Total cost b.

Suppose today is December 4, 2020, and your firm produces breakfast cereal and needs 160,000 bushels of corn in March 2021 for an upcoming promotion. You would like to lock in your costs today because you are concerned that corn prices might go up between now and March. Use Table 25.2 a. What is the total price you are locking in for the 160,000 bushels of corn based on the day's closing price? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. Suppose corn prices are $4.66 per bushel in March. What is the profit or loss on your futures position? (Enter your answer as a positive value. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a. Total cost b.

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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