A farmer sells corn futures for March delivery at $7.50 per bushel.In March the spot price of corn is $7.20 per bushel.Which of the following is correct?
A) The futures buyer is required to deliver corn to the farmer at $7.20.
B) The farmer has locked in an effective price of $7.50 per bushel.
C) The farmer would have been better off without the futures contract.
D) The farmer will receive $7.35 per bushel which is the average of the spot and futures prices.
Correct Answer:
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