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Question #2: Speculating with Futures Contracts [10 Points] After an extensive analysis of political currents in Central and South America, you conclude that coffee prices
Question #2: Speculating with Futures Contracts [10 Points] After an extensive analysis of political currents in Central and South America, you conclude that coffee prices will be lower in the future. The current futures price for coffee is $1.34 and each contract is for 37,500 pounds of coffee. (a) Would you enter a long or short futures position? [2 Points] (b) Suppose that you decide to enter into a 13-contract position. What would be your profit if your analysis is correct and the futures price falls to $1.22? [8 Points]
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