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 priceincreasingordecreasing?

2) What is the initial action in the futures market:buyorsell?

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

4) Did the individual earn aprofitorlossin this hedging situation? Enterprofit or lossin 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:YesorNo.