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Company A enters a short forward contract with Company B. The contract is to trade...

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Accounting

Company A enters a short forward contract with Company B. The contract is to trade 1500 bushels of corn in March. The delivery price is set to 8 dollars per bushel. Explain all the transactions that will occur at delivery if Marchs spot price is 7.5 dollars per bushel and the settlement method chosen is:

a) Physical delivery.

b) Cash settlement.

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