A company takes a short position in 10 futures contracts on soybean on October 2, 2020. The initial futures price is $10.175 per bushel. Suppose on December 31, 2020 the futures price is $10.02 per bushel. On March 20, 2021 it is $9.89 per bushel. The contracts are closed out on March 20, 2021. What gain is recognized (taxable) in the accounting year January 1 to December 31, 2021 if the company is classified as a hedger? Each contract is on 5,000 bushels of soybean.

	A.	$7,750
	B.	$6,500
	C.	$14,250
	D.	$50,875

A company takes a long position in 5 futures contracts on soybean on October 2, 2020. The initial futures price is $10.19 per bushel. Suppose on December 31, 2020 the futures price is $10.25 per bushel. On March 20, 2021 it is $10.42 per bushel. The contracts are closed out on March 20, 2021. What gain is recognized (taxable) in the accounting year January 1 to December 31, 2021 if the company is classified as a speculator? Each contract is on 5,000 bushels of soybean.

	A.	$5,750
	B.	$4,250
	C.	$1,500
	D.	$50,950

Lubys Inc. has derivatives transactions with four different counterparties A, B, C, D which are worth $8 million, -$17 million, $20 million and -$32 million, respectively to Lucys. The transactions are cleared centrally through the same CCP and the CCP requires a total initial margin of $10 million. How much margin or collateral does Lubys have to provide?

	A.	49 million
	B.	21 million
	C.	31 million
	D.	38 million

Suppose a trader who owns 320,000 pounds of commodity A decides to hedge the value of her position with the futures contracts. One futures contract is for the delivery of 40,000 pounds of commodity B. The price of commodity A is $21.20 and the futures price is 18.30 (both dollars per pound). The correlation between the futures price and the price of commodity A is 0.92. The volatilities of commodity A and the futures are 0.31 and 0.38 per year, respectively. What is the minimum variance hedge ratio?

	A.	0.82
	B.	1.23
	C.	1.13
	D.	0.75

Suppose a trader who owns 320,000 pounds of commodity A decides to hedge the value of her position with the futures contracts. One futures contract is for the delivery of 40,000 pounds of commodity B. The price of commodity A is $21.20 and the futures price is 18.30 (both dollars per pound). The correlation between the futures price and the price of commodity A is 0.92. The volatilities of commodity A and the futures are 0.31 and 0.38 per year, respectively. Should the trader take a long or short futures position?

	A.	Long
	B.	Short