You Are a Grain Exporter and Need to Acquire 160,000

question 113

Multiple Choice

You are a grain exporter and need to acquire 160,000 bushels of soybeans for export next month. Futures contracts are for 5,000 bushels and are quoted at 7.50 per bushel. If you want to hedge
Your cost risk, what should you do?

• A) Buy 32 contracts at a current contract value of $240.
• B) Buy 32 contracts at a current contract value of $1,200,000.
• C) Sell 32 contracts at a current contract value of $1,040,000.
• D) Sell 32 contracts at a current contract value of $1,200,000.
• E) Buy 32 contracts at a current contract value of $1,040,000.

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Definitions:

Personal

Relating to or affecting a particular person rather than anyone else; this term is often used in law to distinguish between an individual's private affairs and their public or business roles.

Health Insurance

A type of insurance coverage that pays for medical and surgical expenses incurred by the insured.

Insurable Interest

A requirement in insurance contracts that the policyholder must be at risk of suffering a genuine loss or damage if the insured event occurs.

Economic Loss

The monetary loss suffered by an individual or entity, which can result from a wide range of factors, including breach of contract, negligence, or market fluctuations.