You, a Farmer, Anticipate Taking 80,000 Bushels of Soybeans to the Market

question 1

Multiple Choice

You, a farmer, anticipate taking 80,000 bushels of soybeans to the market in three months. The current cash price for soybeans is $5.85. The size of the futures contract is 5,000 bushels per contract, and the current three-month futures price is $5.88. If you wanted to hedge one-half of your exposure to a drop in the value of soybeans, how many futures contracts would you buy or sell?

• A)Sell 16 futures contracts
• B)Buy 16 futures contracts
• C)Sell 8 futures contracts
• D)Buy 8 futures contracts
• E)Sell 4 futures contracts

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Definitions:

Sacred

Anything considered worthy of spiritual respect or devotion; often set aside from the profane or ordinary.

Collective Effervescence

A sociological concept introduced by Emile Durkheim to describe the sense of energy and harmony experienced by individuals when participating in group activities, leading to a feeling of social solidarity.

Durkheimian Perspective

A theoretical approach in sociology based on the works of Émile Durkheim, focusing on social structures and their role in maintaining societal equilibrium.

Ecstatic

An emotional state of intense joy or overwhelming happiness.