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Fundamentals of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259722615
Author: Richard A Brealey, Stewart C Myers, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Question
Chapter 24, Problem 16QP
a)
Summary Introduction
To compute: The amount of payment among farmer and exchange on day 1.
b)
Summary Introduction
To compute: The amount of payment among farmer and exchange on day 2.
c)
Summary Introduction
To compute: The amount of payment among farmer and exchange on day 3.
d)
Summary Introduction
To compute: The amount of payment among farmer and exchange on day 4.
e)
Summary Introduction
To compute: The amount of payment among farmer and exchange on day 5, total payment and whether the size of payment be different.
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Students have asked these similar questions
please help with this question
10. A soybean farmer plans to sell a portion of their crop in October. To set up a short hedge, the
farmer purchases a put option with a strike price of 750/bu. at a premium of 30/bushel. In October,
the soybean cash price is 640/bu. and November soybean futures are trading at 655/bu. Fill in the
table given here to describe the actions this farmer will take in the cash & futures exchange to
hedge, the gain/loss the manufacturer will experience in these markets, and the net price that the
manufacturer will receive for soybeans.
Futures & Options Markets
Purchase a put option
Time Period
Spot Market
June
No action
Strike Price = 750/bu.
Premium 30/bu.
October
Gain/Loss
Net Price
A farmer sells futures contracts at a price of $6.70 per bushel on 10,000 bushels of corn. The spot price of corn is $6.55 at contract expiration. What is the farmer's profit on the futures contracts?
Table 2.7
Corn futures prices
on the Chicago
Mercantile Exchange,
January 3, 2019
Maturity Last
Mar-19
May-19
Jul-19
Sep-19
Dec-19
Mar-20
Change High
3.8025
0.7500 3.8075 3.7975
3.8800
0.5000 3.8800
3.8750
3.9500
0.2500 3.9525
3.9450
3.9700
0.0000 3.9700
3.9650
4.0075 -0.5000 4.0100
4.0025
4.0975 0.0000 4.1000 4.0950
Low
Source: www.cmegroup.com.
Chapter 24 Solutions
Fundamentals of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
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