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( 1 pt ) Based on the numbers you have calculated above, is a stronger or weaker basis more beneficial to the short hedger? To
pt Based on the numbers you have calculated above, is a stronger or weaker basis more
beneficial to the short hedger? To the long hedger? Why?
pt Which has more of an impact on the net hedge price for the portion of production that
is hedged, price level or basis level?
pts Calculate the margin paid by each producer or to each producer if based on the
following hedging results. Think about the first action taken for each hedge, buy or sell, and
how that can result in a profit or loss from in their margin account. Think: sell high, buy low.
Farmer Smith Beginning Hedge Prices Short
Futures
Basis cents
Expected Cash
Ending hedge prices
CashFutures Sell @ Buy @ # of bu per contract Margin gainloss
a $
b $
Farmer Jones Beginning Hedge Prices long
Futures
Basis cents
Expected Cash
Ending hedge prices
CashFutures Sell @ Buy @ # of bu per contract Margin gainloss
c $
d $
e pt Does the ending cash price andor basis have any impact on amount of margin paid or
received? Why or why not?
f pt If you have half of your productionneeds hedged, and the other half is left on the cash
market, are margin calls a good thing or a bad thing?
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