Corn is currently selling for $6.15 a bushel while the 3-month futures price is $6.20. Carl believes that corn will actually sell for $6.45 a bushel 3 months from now. Which one of the following positions in corn should he take today, given this belief?
A)sell in the spot market
B)sell in the futures market
C)take a long position in the futures market
D)take a short position in the futures market
E)take a short position in the spot market

Question

Quizplus · Accepted Answer

Carl believes that the price of corn in the future will increase from the current spot price and from the futures price. In this case, he should take a long position in the futures market, which allows him to purchase corn at today's futures price and then sell it for a profit when the price increases in the future.

Corn Is Currently Selling for $6