Question

Suppose a farmer is expecting that her crop of oranges will be ready for harvest and sale as 150 , 000 150,000 pounds of orange juice in 3 3 months time. Suppose each orange juice futures contract is for 15 , 000 15,000 pounds of orange juice, and the current futures price is F 0 = 118.65 F 0 ​ =118.65 cents-per-pound. Assuming that the farmer has enough cash liquidity to fund any margin calls, what is the risk-free price that she can guarantee herself. Please submit your answer in cents-per-pound rounded to two decimal places. So for example, if your answer is 123.456 123.456, then you should submit an answer of 123.47 123.47.

Answer 1

Answer:

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