Question
Assume you are a soybean producer. On June 20, you decide to hedge the sale of a portion of your expected bean crop for delivery
Assume you are a soybean producer. On June 20, you decide to hedge the sale of a portion of your expected bean crop for delivery in the fall. Currently, November futures are trading at $7.20 per bushel. The next trading day, the November soybean contract settles at $6.95/bu. How much money is put into or taken out of your margin account by the clearing corporation? The initial and maintenance margin for soybean hedgers is $1000, and there are 5000 bushels per contract. Put your answer in terms of a positive (money put in) or a negative (money taken out) number.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the change in your margin account you can use the following formul...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 StartedRecommended Textbook for
International Financial Management
Authors: Cheol S. Eun, Bruce G.Resnick
6th Edition
71316973, 978-0071316972, 78034655, 978-0078034657
Students also viewed these Economics questions
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
View Answer in SolutionInn App