This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: To hedge the price risk associated with one of its major inputs, Binford Homes uses lumber futures ... (Read 68 times)

arivle123

  • Hero Member
  • *****
  • Posts: 569
on: Apr 25, 2021
To hedge the price risk associated with one of its major inputs, Binford Homes uses lumber futures contracts which trade on the Chicago Mercantile Exchange (CME). The CME Random Length Lumber futures contract calls for delivery of 110,000 board feet (110 MBF, 1 MBF is 1,000 board feet of lumber) of random length 8-foot to 20-foot pieces. Primarily, the deliverable species is Western Spruce, Pine or Fir.

In October of last year, Binford Homes bought 100 CME lumber contracts for March delivery at a price of $300 per MBF. It is now March 16th and the spot price for lumber is $263 per MBF. How can Binford complete its futures trade?

I.   Sell the 100 CME contracts that they purchased.
II.   At maturity take delivery of the lumber and pay the associated transportation costs.
III.   Take a new short position in 100 CME March lumber contracts.
IV.   Buy 100 CME May lumber contracts.

◦ I only
◦ I or II
◦ II or III
◦ II only
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by arivle123 on Apr 25, 2021

KKcool

  • Sr. Member
  • ****
  • Posts: 340
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.
Answer Preview
Only 29% of students answer this correctly


arivle123

  • Member
  • Posts: 569
Reply 2 on: Apr 25, 2021
:D TYSM

brbarasa

  • Member
  • Posts: 308
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

When taking monoamine oxidase inhibitors, people should avoid a variety of foods, which include alcoholic beverages, bean curd, broad (fava) bean pods, cheese, fish, ginseng, protein extracts, meat, sauerkraut, shrimp paste, soups, and yeast.

Did you know?

This year, an estimated 1.4 million Americans will have a new or recurrent heart attack.

Did you know?

Colchicine is a highly poisonous alkaloid originally extracted from a type of saffron plant that is used mainly to treat gout.

Did you know?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Did you know?

About one in five American adults and teenagers have had a genital herpes infection—and most of them don't know it. People with genital herpes have at least twice the risk of becoming infected with HIV if exposed to it than those people who do not have genital herpes.

On average, the ratio of carbon to nitrogen is much higher in terrestrial plants than in other major On average, the ratio of carbon to nitrogen is much higher in terrestrial plants than in other major
Major Events in the History of Psychology (6 of 6) Major Events in the History of Psychology (6 of 6)
Probability of Major Depression as a Function of 5-HTT Allele and Levels of Maltreatment ... Probability of Major Depression as a Function of 5-HTT Allele and Levels of Maltreatment ...
A summary of the major processes in information restructuring of DNA A summary of the major processes in information restructuring of DNA
Major Enzymes of Digestion and What They DO Major Enzymes of Digestion and What They DO
Age is the leading risk factor for cancer Age is the leading risk factor for cancer
Video: Mechanisms of capillary exchange (transcytosis & bulk flow)

For a complete list of videos, visit our video library