Now	Later
Cash Soybeans Market	825-4/bu	810-2/bu
Futures Soybeans Market	820-2/bu	805-0/bu

1) Is the individual concerned about price increasing or decreasing?

2) What is the initial action in the futures market: buy or sell?

3) What is the cash price paid/received by the individual later?

4) Did the individual earn a profit or loss in this hedging situation? Enter profit or loss in the following blank.

5) What is the value (i.e. amount) of the profit/loss on the hedge for one contract (signs matter)?

6) The farmer expects to hedge 6 contracts with each contract representing 5,000 bushels. What is the total (dollar) value of the profit/loss on this hedge?

7) What is the hedged price per bushel on this transaction?

8) If the farm didn't hedge, what would have been the price paid/received for cash soybeans?

9) The individual made the right decision to hedge: Yes or No.