Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Greg recently inherited a large, family-run farm that primarily produces grain for harvest each year. Greg has recently been researching the use of futures contracts to improve his returns on his crop each year and reduce the price risk at harvest time. Greg decides to enter into a futures contract on his grain harvest in March once the crops are in. The current futures price per bushel of grain is $290.50. By May, the price per bushel had grown to $298 per bushel. A contract calls for the delivery of 1,000 bushels of grain.

-find out the long position gain or loss in this scenario.
-find out the short position gain or loss in this scenario.
-Would you recommend doing future contracts like this to Greg? Why, or why not?
-describe how futures contracts can be both good and bad for someone in Greg's position.

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M925670

Have any Question? 


Related Questions in Basic Finance

1 what is the federal agency underwriting function and what

1. What is the federal agency underwriting function and what does it do for the mortgage market, and ultimately for the borrower? 2. Compare and contrast the two categories of bonds and how they differ from mortgage- bac ...

1 when did gnma come into existence what was its original

1. When did GNMA come into existence? What was its original function? What is its main function now? 2. What is a mortgage-related security? What are the similarities and differences between mortgage securities and corpo ...

Design grammars for the following languagesa the set of all

Design grammars for the following languages: a) The set of all strings of 0s and 1s such that every 0 is immediately followed by at least one 1. ! b) The set of all strings of 0s and 1s that are palindromes; that is, the ...

1 under what conditions could it make sense to combine

1. Under what conditions could it make sense to combine private and public warehouses in a logistical system? 2. What role can a warehouse play in postponement strategies? 3. What is the concept of market presence, and h ...

Jacob money inc has a profit margin of 11 and a retention

Jacob Money Inc. has a profit margin of 11% and a retention ratio of 70%. Last year, thefirm had sales of $500 and total assets of $1,000. The desired total debt ratio is 75%. What is the firm's sustainable growth rate?

Budgetsmith manufacturing inc has asked for your assistance

Budget Smith Manufacturing, Inc. has asked for your assistance in preparing a budget for next year's operations. Take a few moments to consider where you would begin the budgeting process.What types of information do you ...

Hotfoot shoes would like to maintain its cash account at a

HotFoot Shoes would like to maintain its cash account at a minimum level of $43,000, but expects the standard deviation in net daily cash flows to be $5,800, the effective annual rate on marketable securities to be 5.7 p ...

The current balance sheet shows a total common equity of 3

The current balance sheet shows a total common equity of 3 million dollars, the company has 125000 shares outstanding, sell at price 50 dollares per share. How much do the firm's market value and book value differ?

After reading the information contained on the web site

After reading the information contained on the Web site www.moneycrashers.com/ five-steps-to-effective-budgeting/, answer the following questions: a. What are three good sources of information that can be accessed to beg ...

Future value of annuity twins jessica and joshua both 25

Future Value of Annuity. Twins Jessica and Joshua, both 25, graduated from college and began working in the family restaurant business. The first year, Jessica began putting $2,000 per year in an individual retirement ac ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen