Q10: Stefano has 450 bushels of wheat that he wants to sell in exactly 10...
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Q10: Stefano has 450 bushels of wheat that he wants to sell in exactly 10 months time. The current price of a bushel is $40. The current risk free rate is 7.5%. He wants to guarantee that he receives a price berween 39.30 and 40.70 for his wheat. He also wants to minimize the amount of cash he has to pay today. Which of the following strategies is best for him? A) Long a $39.30 strike put, and short a $10.70 strike call. B) Long a $40.70 strike call, short a $39.30 strike put. C) Long a $39.30 strike put. D) Short a forward contract (at the forward price). E) Long a S 10 strike call, short a $ 10 strike put
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