On May 1, a soybean producer is expecting a crop of over 60,000 bushels. They would like to sell the crop soon after the October harvest. They are fairly certain that prices are heading down, so they want to lock in a price for December delivery. They decide to hedge 50% of their production. The November futures price today is $12.82. and the local forward cash for November is $12.57. Brokerage fees for each contract is $15.00 round-turn. In November, futures prices are $12.20 and cash prices are $12.27. What was the net price received per bushel for this scenario?

On May 1, a soybean producer is expecting a crop of over 60,000 bushels. They would like to sell the crop soon after the October harvest. They are fairly certain that prices are heading down, so they want to lock in a price for December delivery. They decide to hedge 50% of their production. The November futures price today is $12.82. and the local forward cash for November is $12.57. Brokerage fees for each contract is $15.00 round-turn. In November, futures prices are $12.20 and cash prices are $12.27. What was the net price received per bushel for this scenario?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter21: Risk Management

Section: Chapter Questions

Problem 4P

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