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Author Question: Krusty Burger requires pork for producing its famous Meat-Flavored Sandwich. Frozen Pork Bellies ... (Read 92 times)

Capo

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on: Apr 25, 2021

Question 1

Farmer Jones sold wheat futures contracts at a price of $3 per bushel. She will profit from her futures position if
◦ the futures price goes up.
◦ the futures price goes down.

Question 2

Krusty Burger requires pork for producing its famous Meat-Flavored Sandwich. Frozen Pork Bellies futures contracts trade on the CME. Each contract calls for the delivery of 40,000 lbs. of USDA-inspected Pork Bellies. Krusty requires 40,000lbs on July 10. Today the spot price of pork bellies is $1.177 per pound and the July futures contract is trading for a price of $1.2055/lbs. Assume Krusty enters the appropriate position in July futures contracts to hedge its price risk. On July 10th it buys its pork from local pig farmers at $1.1655/lbs. and closes out the futures position. Unfortunately, the pork bellies futures price had not achieved convergence on the day the position is closed-the futures price is $1.1700 when Krusty Burger closes its position. What is the cost per pound of pork? The purchase cost includes the cumulative profit from the futures transactions.
◦ $1.1255
◦ $1.1655
◦ $1.1770
◦ $1.2010
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by Capo on Apr 25, 2021

ashely1112

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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Capo

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Reply 2 on: Apr 25, 2021
Excellent

nathang24

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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