Expiration the spot price of wheat-hedger

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Reference no: EM131528033

A hedger buys a futures contract that obligates the owner to take delivery of 5,000 bushels of wheat at a price of $3.30 per bushel. At expiration the spot price of wheat is $2.80 per bushel. The hedger has:

A. Saved 50¢ per bushel through hedging

B. Gained peace of mind at a price of 50¢ per bushel

C. The opportunity to avoid taking delivery since price declined

D. Locked in an effective price of $3.05 per bushel

Reference no: EM131528033

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