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Business, 10.05.2021 06:40 breannamartinez9486

Use the following information to answer the next four questions: A hog producer sells a CME live hog future contract at $49.00/cwt. With an estimated local basis of -
$1.50/cwt. Later, when his hogs are ready for slaughter, he sells them in the local
cash market for $43.00/cwt. And buys back the futures contract for $44.00/cwt.
35. What was expected hedge price? a) $49.00/cwt b) $50.50/cwt c)
$47.50/cwt d) $44.00/cwt.
36. What was the actual basis when he lifted the hedge? a) -$1.00/cwt b) -
$1.50/cwt c) +$1.00/cwt d)+$1.50/cwt.
37. What was the realized local hedge price? a) $43.00/cwt b) $44.00/cwt
c) $49.00/cwt d) $48.00/cwt.
38. If hog futures prices had been at $51.00/cwt and cash hog prices at
$50.00/cwt when he lifted his hedge, what would have been the realized hedge
price? a) $48.00/cwt b) $50.00/cwt c) $51.00/cwt d) $47.50/cwt.

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