7). July 2: The futures market for commodity A is trading $5.00 for October delivery. The forward market for A in location y for October is trading at -$.50 the October futures. a) With the cost of moving the commodity, from market z to market y being S.20& adding profit of S.10, what is the basis for location z for trade to take place between market z and y for delivery in October? (i.e., commodity flow from z to y) b) Assume you put the trade on in a). On October 20, when our contract becomes deliverable, the basis for location r is trading October futures - S.10, location y is trading October futures-S.80, and basis for location z is October futures- $.70. The cost of moving A from location y to r is S.50 plus $.10 profit Futures price for A is still S5.00. What trade, or trades, would you put on to improve your profit? - Transport can be sold back in the market for $.05 less than original cost How much would your trading profit be (over and above normal profit for moving A from one market to another)