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You Need to Purchase Apples 1-Month from Now and Would

question 29

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You need to purchase apples 1-month from now and would like to hedge against price movements in apples.The spot price for apples is $5 a bushel and the risk-free rate is 10%.What is the 1-month forward price for a bushel of apples?


Definitions:

Health Insurance

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

Coverage

Coverage refers to the extent of protection or benefits provided under an insurance policy, detailing what specific losses or incidents are financially protected.

Bodily Injury Liability

Insurance coverage that pays for injuries to others caused by the policyholder in an automobile accident.

Automobile Insurance

An insurance policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident.

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