Suppose the Current Spot Price of Corn Is $20 a Bushel

question 64

True/False

Suppose the current spot price of corn is $20 a bushel. A corn farmer expects to produce 2,000 bushels at the end of the season, and she wants to ensure that she gets at least $18 per bushel. Call options on 1,000 bushels of corn with a strike price of $15 and an expiration date at the end of the season are selling for $3,000. By selling call options on her corn crop, the farmer can guarantee that she gets at least $18 per bushel.

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Definitions:

Climax Community

A stable community that has reached a steady state after a succession of ecological communities have evolved and there are no further major changes.

Competitive Exclusion

The ecological principle that two species competing for the same resources cannot coexist at constant population values if other ecological factors remain constant.

Paramecium Caudatum

A species of ciliate protozoan that lives in freshwater environments and is known for its slipper-like shape.

P. Aurelia

A species of single-celled ciliate protozoa that is often studied in genetics and biology.