KidCo Cereal Company Sells "Sugar Corns" for $2

question 12

Multiple Choice

KidCo Cereal Company sells "Sugar Corns" for $2.50 per box.The company will need to buy 20,000 bushels of corn in 6 months to produce 40,000 boxes of cereal.Non-corn costs total $60,000.What is the company's profit if they purchase call options at $0.12 per bushel with a strike price of $1.60? Assume the 6-month interest rate is 4.0% and the spot price in 6 months is $1.65 per bushel.

• A) $6,504 profit
• B) $8,005 loss
• C) $12,064 profit
• D) $11,293 loss

---

Definitions:

Trends

Repeatable patterns taking place over time.

Numeric Data

Information that is represented in numbers, often used for statistical analysis or calculations.

Mean Average

A statistical measure calculated by dividing the sum of values in a data set by the number of values.

Numerical Data

Information that is represented in numbers, allowing for quantitative analysis.