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A farmer is expected to grow 25 tonnes of wheat. A single futures contract involves 10 tonnes of wheat and is currently valued at 100
A farmer is expected to grow 25 tonnes of wheat. A single futures contract involves 10 tonnes of wheat and is currently valued at 100 . Imagine that on the date of settlement the spot price of wheat is equal to 12 per tonne. What is the total payoff to the farmer if she chooses reduce her exposure to risk by engaging in futures contracts and later to settle her position by delivery on the settlement date, which happens to coincide with the date of harvest? 250 260 300 None of the above
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