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Hedging using futures Suppose a farmer is expecting that her crop of oranges will be ready for harvest and sale as 150 , 000 pounds
Hedging using futures
Suppose a farmer is expecting that her crop of oranges will be ready for
harvest and sale as150,000pounds of orange juice in3
months time. Suppose each orange juice futures contract is for15,000
pounds of orange juice, and the current futures price isF0=118.65cents-per-pound.
Assuming that the farmer has enough cash liquidity to fund
any margin calls, what is the risk-free price that she can guarantee herself?
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