# Quiz #3. - PowerPoint PPT Presentation

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Quiz #3.

## Quiz #3.

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##### Presentation Transcript

1. Quiz #3. • Name and SSN on scan sheets • Questions 1-4: • calculate the net price as a result of hedging

2. 1. Long Hedge Feb. 4: You plan to buy feeder cattle in May. May futures @ \$82.50, Exp. basis is -\$1.50 May: Local price is \$78.00. May futures @ \$78.50 Realized net price paid is: • \$79.50 • \$81.00 • None of the above

3. 2. Long Hedge Feb 4: Elevator needs to buy wheat by July. July futures @ \$3.50/bu., Exp. basis is -\$0.40 June: Local price is \$4.50. July futures @ \$5.10 Realized net price paid is: • \$3.30 • \$2.90 • None of the above

4. 3. Short Hedge. Feb. 4: Plan to sell 40 fed cattle in June June futures @ \$68.00/cwt., Exp. basis is +\$1.00. June: Local price is \$64.50, June futures @ \$65.00 Realized net price received is: • \$68.50 • \$65.50 • None of the above

5. 4. Short Hedge. Feb. 4: Plan to sell 5000 bu. wheat in July July futures @ \$3.00/bu., Exp. basis is -\$0.40. July: Local price is \$3.70, July futures @ \$4.00 Realized net price received is: • \$3.40 • \$3.75 • \$2.70 • \$3.00 • None of the above

6. 5 • The minimum price change on a cattle futures contract is: a. 2 cents per cwt b. 2½ cents per cwt c. 1 cent per cwt d. \$1 per cwt • none of the above

7. For Quiz #4 Gaelic football