Answered step by step
Verified Expert Solution
Question
1 Approved Answer
AGEC 4740 Grain and Livestock Marketing Buying Strategies Assignment Question 1 It is December 2nd May 20 soybean futures are trading at 905'6. An 860
AGEC 4740 Grain and Livestock Marketing Buying Strategies Assignment Question 1 It is December 2nd May 20 soybean futures are trading at 905'6. An 860 May 20 soybean put is trading at 9'0 and an 860 May 20 soybean call is trading at 54'4. A 940 May 20 soybean put is trading at 49'6 and a 940 May 20 soybean call is trading at 15'6. a) Suppose you will be buying soybeans in May 20 and you hedged your soybean purchase on Dec 2nd with the May 20 soybean futures contract. When you buy your soybeans the May 20 soybeans futures are 933'2 and you pay 911'2 cash for the soybeans. How much is your basis? What is the net purchase price for the soybeans? (10 points) b) Suppose you set a fence for your soybean purchase on Dec 2nd. What is your maximum purchase price? What is your minimum purchase price? Use the basis in part a. (10 points) c) When you buy your soybeans, the May 20 soybeans futures are 933'2 and you pay 9112 cash for the soybeans. You had set your fence in part b. What was your net gain/loss on your put? What was your net gain/loss on your call? What was your net purchase price? (15 points) AGEC 4740 Grain and Livestock Marketing Buying Strategies Assignment Question 1 It is December 2nd May 20 soybean futures are trading at 905'6. An 860 May 20 soybean put is trading at 9'0 and an 860 May 20 soybean call is trading at 54'4. A 940 May 20 soybean put is trading at 49'6 and a 940 May 20 soybean call is trading at 15'6. a) Suppose you will be buying soybeans in May 20 and you hedged your soybean purchase on Dec 2nd with the May 20 soybean futures contract. When you buy your soybeans the May 20 soybeans futures are 933'2 and you pay 911'2 cash for the soybeans. How much is your basis? What is the net purchase price for the soybeans? (10 points) b) Suppose you set a fence for your soybean purchase on Dec 2nd. What is your maximum purchase price? What is your minimum purchase price? Use the basis in part a. (10 points) c) When you buy your soybeans, the May 20 soybeans futures are 933'2 and you pay 9112 cash for the soybeans. You had set your fence in part b. What was your net gain/loss on your put? What was your net gain/loss on your call? What was your net purchase price? (15 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started