1) Today, the spot price for corn is $29 per bushel. The current futures price of corn for delivery in Sept 2020 is $30. Kraft Inc, a major food company that consumes corn, wants to hedge the risk against the rise in the corn price for purchase in the August of 2020. Thus it enters into the corn futures market now and plans to close out its futures position in August 2020. Suppose at August 2020 the futures price of corn for delivery in Sept 2020 is $37 and the market price of corn is $38. What is the effective price that Kraft pays with hedging in the futures market?

2)

Suppose Molson Brewery can invest funds in an account for five years with a rate of return of LIBOR minus 30 basis points. The five-year LIBOR swap rate is 3% per year. What fixed rate of interest can the company earn by using the swap?