A Soybean Farmer Anticipates the Harvest of 10,000 Bushels but Is

question 7

Essay

A soybean farmer anticipates the harvest of 10,000 bushels but is concerned about the spot price that may exist at that time.He therefore sells two futures contracts (5,000 bu.each, @ $5.75 per bu.).Unfortunately, the farmer was overly pessimistic, and the spot price at contract expiration is $6.00 per bushel.Ignoring the premium paid, and making the simplifying assumption that the contract was only held for one "day," show the farmer's financial results of hedging.

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Definitions:

Cleansing

The process of making something clean, either physically by removing dirt and impurities, or metaphorically, as in purifying the mind or body.

Ecotourism

Responsible travel to natural areas that conserves the environment, sustains the well-being of the local people, and involves interpretation and education.

Indirect Value

The benefits provided by biodiversity that do not have direct economic value, such as climate regulation and pollination.

Indirect Values

Benefits provided by ecosystems that do not have a direct economic value, such as climate regulation and cultural significance.