3. Basis risk: A short hedge for a cor grower. The expected basis is 5-0.30 Date Cash Futures 1-Oct C ost of Production $6.00 May Futures $6.40 (A) What is the forward price? (B) What is the expected profit margin? = 1-Oct Sell May Futures @ $6.40 10-May ! Sell Cash @ $5.70 Buy May Futures @ $6.10 (C) What is actual basis on May 10th? (D) Is this a weaker or stronger basis risk? (E) What is the gain or loss on futures market result? (F) What is the gain or loss on cash market result? (G) What is the realized price (or net selling price)? (H) What is the overall profit? 4. Basis risk: A short hedge for a cor grower. The expected basis is 5-0.30. Date Cash Futures 1-Oct Cost of Production $6.00 May Futures $6.40 (A) What is the forward price? (B) What is the expected profit margin? = 1-Oct Sell May Futures @ $6.40 10-May Sell Cash @ $5.70 Buy May Futures @ $5.90 (C) What is actual basis on May 10? (D) Is this a weaker or stonger basis risk? (E) What is the gain or loss on futures market result? (F) What is the gain or loss on cash market result? (G) What is the realized price for net selling price? = (H) What is the overal profit? 3. Basis risk: A short hedge for a cor grower. The expected basis is 5-0.30 Date Cash Futures 1-Oct C ost of Production $6.00 May Futures $6.40 (A) What is the forward price? (B) What is the expected profit margin? = 1-Oct Sell May Futures @ $6.40 10-May ! Sell Cash @ $5.70 Buy May Futures @ $6.10 (C) What is actual basis on May 10th? (D) Is this a weaker or stronger basis risk? (E) What is the gain or loss on futures market result? (F) What is the gain or loss on cash market result? (G) What is the realized price (or net selling price)? (H) What is the overall profit? 4. Basis risk: A short hedge for a cor grower. The expected basis is 5-0.30. Date Cash Futures 1-Oct Cost of Production $6.00 May Futures $6.40 (A) What is the forward price? (B) What is the expected profit margin? = 1-Oct Sell May Futures @ $6.40 10-May Sell Cash @ $5.70 Buy May Futures @ $5.90 (C) What is actual basis on May 10? (D) Is this a weaker or stonger basis risk? (E) What is the gain or loss on futures market result? (F) What is the gain or loss on cash market result? (G) What is the realized price for net selling price? = (H) What is the overal profit