Financial Derivatives

1.What is the size of the corn contract?

2What is the initial margin and maintenance margin for March 2018 Corn Contract?

3What is current settlement price of March 2018 Corn contract? Please state the date you obtained the data.

4Who initiate the delivery process (buyer or seller of the contract)?

5How would a South Dakota farmer hedge his impending harvest? Selling or Buying corn futures?

6What quality of corn will the framer have to deliver based on the contract specification? Based on your answer to Item (2), for 1 contract sold, how much will the framer receive and what must the farmer deliver? Of course, it is an urban myth that commodities will be delivered to the front lawn. All commodities will be delivered to one of the warehouses across the country. 7Under what situation will the South Dakota farmer receive a margin call? Explain briefly how the margin position will be restored. BWhat will happen if the South Dakota farmer ignores his brokers margin call?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sample Solution

ACED ESSAYS