You Would Like to Lock in the Selling Price on 55,000

question 76

Multiple Choice

You would like to lock in the selling price on 55,000 bushels of wheat, which you plan to harvest and deliver to the market in September. The September futures price quote is currently 912΄6. If you write September futures contracts on your wheat, you will be guaranteed a total price of _____ for your crop. Each contract is quoted in cents and 1/8 ths of a cent per bushel with a contract size of 5,000 bushels.

• A) $45,637.50
• B) $502,012.50
• C) $11,908.75
• D) $297,700.50
• E) $2,977,000.25

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Definitions:

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Raw Materials

The basic materials from which products are manufactured or made.

Accounts Payable

The amounts a company owes because it purchased goods or services on credit from a supplier or vendor.

Required Production

The quantity of products that must be manufactured or produced to meet customer demand.