Terms (fill out in your own words): 1. Forward Contract, Futures Contract 2. Futures Price 3. Spot Price 4. Open Interest 5. Speculating vs. Hedging 6. Basis 7. Convergence Property 8. Interest Rat Terms (fill out in your own words): 1. Margin, Maintenance Margin 2. Mark-to-market 3. Margin Call 4. Basis 5. Convergence Property 6. Spot-Futures Parity Theorem 7. Arbi wwwwww 1. A farmer sells a futures contracts at a price of $2.75 per bushel. The spot price of corn is $2.55 at contract expiration. The farmer harvested 12,500 bushels of corn and sold futures contracts on 10,000 bushels of corn. 2. How much did the farmer improve his cash flow by hedging sales with the futures contract? 3. The current level of the S&P 500 is 1,250. The dividend yield on the S&P 500 is 3%. The risk-free interest rate is 6%. The futures price quote for a contract on the S&P 500 due to expire 6 months from now should be 4. On Monday morning you sell one June T-bond futures contract at $97,843.75. The contract's face value is $100,000. The initial margin requirement is $2,700, and the maintenance margin requirement is $2,000 per contract. After Monday's close the balance on your margin account will be Day Monday Settlement 97406.25 Tuesday. 98000 Wednesday 100000