You are the finance manager of Oman Flour Mills. Oman flour mills imports 600 tons of wheat from Australia per month. The mill uses the wheat for production of bread. On 1st April spot price of Australian wheat is 1400 $ per ton. The finance manager is worried that by end of April spot price of Australian wheat will rise to 2000$ per ton. To protect the company against the sharp rise in input cost of wheat, on 1st April the finance manager purchased Chicago wheat NDF forward contracts for end of April expiry (30 April expiry) from ADM Chicago at forward rate of 1450 per ton. The finance manager feels that by end of April price of Chicago wheat NDF forward will rise to 2050 per ton. The finance manager is interested in hedging and not speculation. The problem is that Chicago wheat is not suitable for Oman Flour Mills for production of bread. Even if Oman Flour Mills takes delivery of the wheat from ADM Chicago, it will not be able to use it. Why did the finance manager book Chicago wheat forward? Did he make a mistake O a. He made a mistake O b. He wants to make a profit of 600 per ton for Oman Flour Mills None of these O d. Heshould have booked a futures contract O e. The settlement process will ensure that cost of wheat for Oman Flour mills will be 1400 per ton

You are the finance manager of Oman Flour Mills. Oman flour mills imports 600 tons of wheat from Australia per month. The mill uses the wheat for production of bread. On 1st April spot price of Australian wheat is 1400 $ per ton. The finance manager is worried that by end of April spot price of Australian wheat will rise to 2000 $ per ton. To protect the company against the sharp rise in input cost of wheat, on 1" April the finance manager purchased Chicago wheat NDF forward contracts for end of April expiry (30 April expiry) from ADM Chicago at forward rate of 1450 per ton. The finance manager feels that by end of April price of Chicago wheat NDF forward will rise to 2050 per ton. The finance manager is interested in hedging and not speculation The problem is that Chicago wheat is not suitable for Oman Flour Mills for production of bread. Even if Oman Flour Mills takes delivery of the wheat from ADM Chicago, it will not be able to use it. Why did the finance manager book Chicago wheat forward? Did he make a mistake a. He made a mistake Ob. He wants to make a profit of 600 per ton for Oman Flour Mills Oc None of these Od Heshould have booked a futures contract Oe. The settlement process will ensure that cost of wheat for Oman Flour mills will be 1400 per ton You are the finance manager of Oman Flour Mills. Oman flour mills imports 600 tons of wheat from Australia per month. The mill uses the wheat for production of bread. On 1st April spot price of Australian wheat is 1400 $ per ton. The finance manager is worried that by end of April spot price of Australian wheat will rise to 2000 $ per ton. To protect the company against the sharp rise in input cost of wheat, on 1" April the finance manager purchased Chicago wheat NDF forward contracts for end of April expiry (30 April expiry) from ADM Chicago at forward rate of 1450 per ton. The finance manager feels that by end of April price of Chicago wheat NDF forward will rise to 2050 per ton. The finance manager is interested in hedging and not speculation The problem is that Chicago wheat is not suitable for Oman Flour Mills for production of bread. Even if Oman Flour Mills takes delivery of the wheat from ADM Chicago, it will not be able to use it. Why did the finance manager book Chicago wheat forward? Did he make a mistake a. He made a mistake Ob. He wants to make a profit of 600 per ton for Oman Flour Mills Oc None of these Od Heshould have booked a futures contract Oe. The settlement process will ensure that cost of wheat for Oman Flour mills will be 1400 per ton