Multiple Choice
A milling company buys a futures contract that requires it to take delivery of 5,000 bushels of wheat at a price of $6.80 per bushel.At expiration the spot price of wheat is $6.68 per bushel.The miller:
A) has saved $0.12 per bushel through hedging.
B) has locked in an effective price of $6.80 per bushel.
C) can choose not to take delivery since the price declined.
D) has locked in an effective price of $6.68 per bushel.
Correct Answer:
Verified
Correct Answer:
Verified
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