Question
A farmer observes that the spot price of corn is $2.75 per bushel in July and the September futures price is $2.80. The farmer would
A farmer observes that the spot price of corn is $2.75 per bushel in July and the September futures price is $2.80. The farmer would like a prediction of the spot price in September but believes the market is dominated by hedgers holding long positions in corn. Explain how the farmer would use this information in a forecast of the future price of corn. Be specific.
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Investments Analysis and Management
Authors: Charles P. Jones
12th edition
978-1118475904, 1118475909, 1118363299, 978-1118363294
