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Now is September. Laura will sell 10,000 bushels of corns in December. In September, the December corn futures are selling for $6 per bushel. To
Now is September. Laura will sell 10,000 bushels of corns in December. In September, the
December corn futures are selling for $6 per bushel. To hedge her corn price risk, she sells 10,000
bushels of December corn futures. Which of the following is CORRECT if the corn price goes down
to $5.50 per bushel in December?
O Laura's payoff in the spot market in December is -$55,000.
O Laura's payoff in the futures market in December is -$5,000.
O Laura's total payoff from both the spot market and futures market in December is $60,000.
O Laura's total payoff from both the spot market and futures market in December depends on spot price.
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
8th Edition
0077261453, 978-0077261450
