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Suppose you are a feed manufacturer and purchase corn on a regular basis. You would like to protect against rising prices. You purchase a September corn futures contract at $3.70/bushel today and assume when you buy corn from your supplier in August, the basis is -$0.48. What would be the cash purchase price, futures gain or loss, and net purchase price in August if the September corn futures price is $3.95? (please show work/formulas for reference)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91771972

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