You Are the Purchasing Agent for a Cookie Company

question 248

Multiple Choice

You are the purchasing agent for a cookie company. You anticipate that your firm will need 15,000 bushels of oats in March. You decide to hedge your position today and did so at the closing price of
The day. Assume that the actual market price turns out to be 261´0 on the day you actually buy the
Oats. How much more would you have spent or saved if you had not taken the hedge position?
Oats - 5,000 bu.: cents per bu.

• A) Spent $15 more.
• B) Spent $150 more.
• C) Saved $15.
• D) Saved $150.
• E) Saved $1,500.

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