Consider a producer who is in the business of producing Cocoa for future sale. At the time of $0($i$.$e$.,$ present time$),$ we have S$(0)=$ $$1652,$ F$(0)=$ $$1675.$ The firm is expecting to sell the Cocoa in $2$ months, while the delivery date of the futures contract is $3$ months away. Assume that the price of Cocoa in two months is unpredictable, but we know that the future price in two months will be $$8$ higher than the spot price of Cocoa in two months $($i$.$e$.,$ F$($t$)=$ S$($t$)+$ $$8).$Consider a producer who is in the business of producing Cocoa for future sale. At the

time of $0($i$.$e$.,$ present time$),$ we have $S(0)=$$$1652,F(0)=$$$1675.$ The firm is

expecting to sell the Cocoa in $2$ months, while the delivery date of the futures

contract is $3$ months away. Assume that the price of Cocoa in two months is

unpredictable, but we know that the future price in two months will be $$8$ higher

than the spot price of Cocoa in two months $($i$.$e$.,F(t)=S(t)+$$$8).$

Question $18.$ Without hedging, what is the firm's net profit at date $t($i$.$e$.,$ in two

months$)?$

A$)$ $$23$

B$)$ $$8$

C$)$ $$31$

D$)$ $$15$

E$)$ Cannot be determined.Consider a producer who is in the business of producing Cocoa for future sale. At the

time of $0($i$.$e$.,$ present time$),$ we have $S(0)=$$$1652,F(0)=$$$1675.$ The firm is

expecting to sell the Cocoa in $2$ months, while the delivery date of the futures

contract is $3$ months away. Assume that the price of Cocoa in two months is

unpredictable, but we know that the future price in two months will be $$8$ higher

than the spot price of Cocoa in two months $($i$.$e$.,F(t)=S(t)+$$$8).$

Question $18.$ Without hedging, what is the firm's net profit at date $t($i$.$e$.,$ in two

months$)?$

A$)$ $$23$

B$)$ $$8$

C$)$ $$31$

D$)$ $$15$

E$)$ Cannot be determined.