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What is the number of futures contracts needed to fully hedge the exporter's wheat requirements? Question 5 options: 7 contracts 8 contracts 9 contracts 1
What is the number of futures contracts needed to fully hedge the exporter's wheat requirements?
Question options:
contracts
contracts
contracts
contractsIt is September and an exporter a business looking to purchase commodity
to sell it later in New Orleans has made a commitment to sell bushels of wheat to a customer in November. The exporter has limited storage and, therefore, will purchase the wheat at the same time that he loads the ship for export. The November wheat futures are trading at $bu and the expected basis is $ under. The exporter decides to hedge to protect against an adverse price movement. In November, the wheat futures price has increased to $bu and the cash price has increased to $bu Assume the broker charges the exporter a commission of $ per contract. Answer questions through
What is the position the exporter should take in the futures market?
Question options:
Do nothing
Go short or sell futures contracts
Go long or buy futures contracts
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