Calculate the farmer gains and losses associated

Assignment Help Financial Management

Reference no: EM132037245

A farmer produces 10,000 bushels of corn per season, which he sells in September. A good friend of his suggested he sells the whole production in the future's market. The settlement price of the corn futures contract for september is 403.4 (or 403'4 in CME parlance). The projection indicates the spot price of corn in September will either be 3.5 or 4.5 Dollars per bushel with equal pribability. The farmer is very weary of selling it all in the futures market. What proportion of the production should he sell in the futures market and should he take the Long or the Short? Calculate the Farmer's gains and losses associated with however many futures are needed. Do all the research needed to answer this question.

Reference no: EM132037245

Questions Cloud

Identify technical analysis : Being specific, identify Technical Analysis and explain its relation to or its effect on portfolio management and why it is analytically useful?

Calculate the amount of accumulated depreciation : Assuming the Company uses the straight-line method, the amount of accumulated depreciation on the Year 6 balance sheet would be

What will the firm PE ratio be : A firm has 50,000 shares of stock outstanding, net income of $50,000, and a PE ratio of 15. What will the firm’s PE ratio be if firm repurchases 25,000 shares.

What is the value of the call option if the exercise price : Suppose the current price of the company's stock is $80. What is the value of the call option if the exercise price is $65 per share?

Calculate the farmer gains and losses associated : Calculate the Farmer's gains and losses associated with however many futures are needed.

How much could it pay to the common stockholders : On January 1, 2016 Bogart Acres Company issued 10,000 shares of 10%, $20 par value cumulative preferred stock. How much could it pay to the common stockholders

Reduce volatility of security and increase marketability : Therefore, in an effort to reduce the volatility of the security and increase its marketability,

Prepare the entry to record issuance of the shares : Portland sound sold 400 shares of common stock at $8 per share on May 1. The entry to record issuance of the shares on May 1 will

Calculate the amount of accumulated depreciation : Assuming the Company uses the straight-line method, the amount of accumulated depreciation on the Year 6 balance sheet would be

User Account

All Pages