q2) Mr. Ahmed believes that the prices ofcorn will go from its current price of $3.00 per bushel to $4.00 per bushel in the next 3 month in the international market. September Corn futures are currently selling for $3.25 per bushel . Ahmed bullishly purchases 20 contracts (5,000 Bushel)on margin. The initial margin is 15 percent and commission rates for a round trip are $40 per contract.

Ahmed was overoptimistic. Three month later corn future prices fell $ 2.75 per bushel.

Required; Compute;

a) thenet loss Mr. Ahmed suffered to reverse out of his position in the future market.

b) the net gain if the prices of corn had increased to $3.90 per bushel over the 3-month period.

c) Assume if Mr. Ahmed is a farmer would like to lock in $3.25 per bushel price what should he do?