Multiple Choice
A farmer stores his fall harvest of corn and sells corn futures for March delivery at $2.50 per bushel.In March the spot price of corn is $2.20 per bushel.Which of the following is correct?
A) The farmer is obligated to deliver corn to the futures buyer at $2.20.
B) The farmer has locked in an effective price of $2.50 per bushel.
C) The farmer would have been better off without the futures contact.
D) The farmer will receive $4.70 per bushel, which more than doubles the profit obtained without futures.
Correct Answer:
Verified
Correct Answer:
Verified
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