A farmer hedges his expected crop of 80,000 bushels of Corn with a hedge ratio: h = 1. NF = 5,000 bushels. Harvest is NOV, so the farmer uses the DEC futures with: F0,DEC = $3.20/Bushel.

Part 1 Use a time table to describe the hedge and its result in NOV;

SNOV = $2.95/bushel and FNOV, DEC = $3.00/bushel. Calculate the selling price.

Part 2 Use a new time table to describe the hedge and its result in NOV:

SNOV = $3.95/bushel and FNOV, DEC = $4.00/bushel. Calculate the selling price.