Equally offset the expected long cash position

Assignment Help Operation Management

Reference no: EM13759652

On Aug. 15 a feed barley producer feels that $300/t is a good price to sell the remainder of the un priced feed barley he/she is about to harvest since the December feed barley futures contract is trading at $300/t on the ICE. The producer sells five (5) December futures contracts or 100t (5 X 20t = 100t) to equally offset the expected long cash position. On November 20 the local cash price is $360/t. The producer sells the feed barley for cash and buys back the futures at $365/t. What is the resulting final price realized and why is it different from the target price of $300/t?

Reference no: EM13759652

Questions Cloud

Two pros and two cons of a business : Two pros and two cons of a business applying different capital budgeting technique when i is faced with making wealth-maximizing decisions around investing corporate funds

While valuation analysis is a quantitative exercise : While valuation analysis is a quantitative exercise, there are a number of judgements that the analyst must make in constructing the valuation.Identify, prioritise, and discuss the most important analytical choices in terms of their impact on the out..

Use information and information technologies : How can a goal-seeking, mission-driven, purposeful organization use information and information technologies to gain a competitive advantage in its attempt to outperform its competitors in achieving its goals?

Business professionals changing and expanding : How is the use of information and decision support systems for managers and business professionals changing and expanding? Why is it important for business managers to have an understanding of the systems development process?

Equally offset the expected long cash position : On Aug. 15 a feed barley producer feels that $300/t is a good price to sell the remainder of the un priced feed barley he/she is about to harvest since the December feed barley futures contract is trading at $300/t on the ICE.

The average time for the gift wrapping operation : Jeff Lee Beans is famous for its boxed candies, which are sold primarily to businesses. One operator had the following observed times for gift wrapping in minutes 2.3, 2.6, 2.2, 2.4, 2.3. The operator has a performance rating of 110% and an allowance..

Described their operation far more organic than mechanistic : In a recent job interview a company representative described their operation as "far more organic than mechanistic," which left you largely confused. You have always wanted to work for a company that considers the professional development of employee..

Forecasting methods gives a responsive forecast : Which of the following forecasting methods gives a responsive forecast?

Decide between two different conveyor belt system : Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $212,000, has a four-year life, and requires $68,000 in pretax annual operating costs. System B costs $300,000, has a six-year life..

User Account

All Pages