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(4points) Suppose today is August 10, 2020, and your agricultural firm produces corn with expected yield of 200,000 bushels of corn in October 2020. You
(4points) Suppose today is August 10, 2020, and your agricultural firm produces corn with expected yield of 200,000 bushels of corn in October 2020. You would like to lock in your sales price today because you are concerned that corn prices might go down between now and October Suppose current price of corn is $4 per bushel and Futures price in October 2020 is $3.825 per bushel of corn. (a) How could you use corn futures contracts to hedge your risk exposure? What price would you effectively be locking in based on the closing price of the day? (b) Suppose corn prices are $4.09 per bushel in October. What is the profit or loss on your futures position? Explain how your futures position has eliminated your exposure to price risk in the corn market. HTML Editora B I Y A A TX E 5 1 3 X X VX C 0 V TT 12pt Paragraph
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