Suppose that a hedger plans to sell 100,000 bushels of corn in June and uses the July futures contract for hedging. Each contract is on 5,000 bushels of corn and therefore a total of twenty contracts are shorted. Suppose that the futures price at the time the hedge is initiated is 200 cents per bushel and that the futures price is 220 cents per bushel when the hedge is closed out in June. The spot price for the corn being sold in June is 225 cents per bushel. What is the USD price received for the corn when the loss from hedging is considered?
Suppose that a hedger plans to sell 100,000 bushels of corn in June and uses the July futures contract for hedging. Each contract is on 5,000 bushels of corn and therefore a total of twenty contracts are shorted. Suppose that the futures price at the time the hedge is initiated is 200 cents per bushel and that the futures price is 220 cents per bushel when the hedge is closed out in June. The spot price for the corn being sold in June is 225 cents per bushel. What is the USD price received for the corn when the loss from hedging is considered? A.225,000 USD; B.245,000 USD; C.200,000 USD; D.205,000 USD