Supposing the futures price of orange juice

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9: You are a smoothie manufacturer who anticipates purchasing 105,000lbs of orange juice on the ICE FUTURES US Market (NOTE: lbs or pounds are an imperial measurement of mass). The current spot price of orange juice is $0.94/lbs and the futures price is $0.97/lbs. Each contract is for the delivery of 15,000lbs of orange juice at maturity. In order to hedge exposure of upward price pressure on orange juice on the spot market you must go long how many contracts?
a) 7 b) 6 c) 5 d) 4

10: Supposing the futures price of orange juice at today is $1.07/lbs, the profit on your position for the strategy in Q9 is:
a) $6000 b) $7500 c) $10,500 d) $9,000

Reference no: EM132774780

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