Suppose that you are a wheat farmer. Answer the following questions.

It is

September,

and you intend to have

50,000

bushels of wheat harvested and ready to sell in November. The current spot market price of wheat is

$2.75

per bushel, and the current December futures price of wheat is

$3.00

per bushel.

Part 2

If each wheat futures contract is for

5,000

bushels, how many contracts will you buy or sell?

You will

buy

sell

enter your response here

contracts. (Enter your response as an

integer.)

Part 3

The total value of these futures contracts is

$enter your response here.

(Enter your response as an

integer.)

Part 4

It is now November, and you sell

50,000

bushels of wheat at the spot price of

$2.85

per bushel. If the futures price is

$3.10

and you settle your position in the futures market, what was your gain or loss on your futures market position?

The

gain

loss

on your futures market position was

$enter your response here.

(Enter your response as an

integer.)

Part 5

The

gain

loss

on your spot market position was

$enter your response here.

(Enter your response as an

integer.)

Part 6

Therefore, you

were

were not

successful in completely hedging your risk from price fluctuations in the wheat market.

Suppose that you are a wheat farmer. Answer the following questions. If each wheat futures contract is for 5,000 bushels, how many contracts will you buy or sell? You will contracts. (Enter your response as an integer.) The total value of these futures contracts is $ (Enter your response as an integer.) The on your futures market position was $ (Enter your response as an integer.) The on your spot market position was 9 (Enter your response as an integer.) Therefore, you successful in completely hedging your risk from price fluctuations in the wheat market