Q1

Question 1 5 pts a) Explain the difference between a stop order to sell at 30 and a stop-limit order to sell at 30 with a limit of 25. (2 marks) b) A farmer expects to have 160,000 pounds of corn to sell in May. The corn futures contract traded by the exchange is for the delivery of 40,000 pounds of corn. The following delivery months are available: February, April, June, August. October, and December. How can the farmer use the contract for hedging? From the farmer's viewpoint, what is the impact of basis risk on his/her financial position