Question
NOTE: you must show all work to obtain credit. Short hedges when prices decrease Given this data: Oct live cattle futures price in Mar is
NOTE: you must show all work to obtain credit.
Short hedges when prices decrease
Given this data:
Oct live cattle futures price in Mar is $130.70 per cwt
Oct live cattle futures price in Sep is $125.50 per cwt
Basis in Mar is -$2.00 per cwt
Question #1. What would the net price received in Sep be if the basis stayed constant? Q
Question #2. What would the net price received in Sep be if the basis strengthened to -$1.00?
Question #3.What would the net price received in Sep be if the basis weakened to -$3.00?
Question#4. What would the net price received in Sep be if the basis stayed constant?
Question#5. What would the net price received in Sep be if the basis strengthened to -$1.00?
Question#6. What would the net price received in Sep be if the basis weakened to -$3.00?
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