Bonus Question #2 (14 marks) A Live cattle contract (40,000 lbs) due in 12 months is 70 cents/lb and a Feeder contract (50,000 lbs) due in 6 months is 90 cents/ lb. If you expect the incentive to keep the younger cattle alive for delivery on the Live contract will decrease, what positions will you place today? Explain by assuming the average Feeder cow weighs 750 lbs and the average live cow weighs 1500 lbs. Calculate your spread (feeder - live) profit / loss if the Live contract subsequently trades at 75 cents/lb and the Feeder trades at 85 cents/lb. Explain your result Additional resources for assignment No attachment yet