You Expect to Deliver 42,000 Bushels of Wheat to the Market

question 24

Multiple Choice

You expect to deliver 42,000 bushels of wheat to the market in July.Today,you hedge your position by selling futures contracts on half of your expected delivery at the final price of the day.Assume that the market price turns out to be 582.0 when you actually deliver the wheat.How much more or less would you have earned if you had not bought the futures contracts?
Wheat - 5,000 bu.:
U.S.cents per bu.

• A)$8,000 less
• B)$4,305 less
• C)neither more nor less
• D)$4,305 more
• E)$8,000 more

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Definitions:

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Sartre

Jean-Paul Sartre, a French existentialist philosopher, playwright, novelist, and political activist known for his exploration of freedom and existential angst.

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