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Commodity Hedging-Short SPOT MARKETFUTURES MARKET 5/1/99 GROWING GRAIN 5000 BU. @ $2.00 5/1/99 SELL CONTRACT 5000 BU. @ $2.10 8/1/99 SELL GRAIN SPOT 5000 BU. @ $2.20 8/1/99 BUY CONTRACT 5000 BU. @ $2.28 GAIN = 5000 BU. X $.20 = $1000 LOSS = 5000 BU. X $.18 = $900 NET = $100
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Commodity Hedging-Short SPOT MARKETFUTURES MARKET 5/1/99 GROWING GRAIN 5000 BU. @ $2.00 5/1/99 SELL CONTRACT 5000 BU. @ $2.10 8/1/99 SELL GRAIN SPOT 5000 BU. @ $1.80 8/1/99 BUY CONTRACT 5000 BU. @ $1.80 LOSS = 5000 BU. X $.20 = $1000 GAIN = 5000 BU. X $.30 = $1500 NET = $500
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Commodity Hedging-Long SPOT MARKETFUTURES MARKET 5/1/99 SHORT GRAIN 5000 BU. @ $2.00 5/1/99 BUY CONTRACT 5000 BU. @ $2.10 8/1/99 BUYS GRAIN SPOT 5000 BU. @ $1.80 8/1/99 SELL CONTRACT 5000 BU. @ $1.80 GAIN = 5000 BU. X $.20 = $1000 LOSS = 5000 BU. X $.30 = $1500 NET = -$500
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Commodity Hedging-Long SPOT MARKETFUTURES MARKET 5/1/99 SHORT GRAIN 5000 BU. @ $2.00 5/1/99 BUY CONTRACT 5000 BU. @ $2.10 8/1/99 BUYS GRAIN SPOT 5000 BU. @ $2.30 8/1/99 SELL CONTRACT 5000 BU. @ $2.35 LOSS = 5000 BU. X $.30 = $1500 GAIN = 5000 BU. X $.25 = $1250 NET = -$250
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Bond Prices Bond prices are quoted as follows: 98-23 The “23” is 23/32nds of $1.00 23/32 =.719 Therefore, 98-23 is equivalent to $ 987.19 Similarly, 96-16 is $965.
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Interest Rate Hedging-Long CASH MARKETFUTURES MARKET 5/1/99 SHORT BONDS TBOND @ 97-22 5/1/99 BUY 1 CONTRACT TBOND @ 97-29 8/1/99 BUY BONDS CASH TBOND @ 98-11 8/1/99 SELL CONTRACT TBOND @ 98- 17 LOSS = $11.77 @ Bond GAIN = $6.25 @ Bond NET = $5.52/ Bond X 100 Bonds = $552.00
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Interest Rate Hedging-Long CASH MARKETFUTURES MARKET 5/1/99 SHORT BONDS TBOND @ 97-22 5/1/99 BUY 1 CONTRACT TBOND @ 97-29 8/1/99 BUY BONDS CASH TBOND @ 97-11 8/1/99 SELL CONTRACT TBOND @ 97-18 GAIN = $3.44 @ Bond LOSS = $3.44 @ Bond NET = 0
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Interest Rate Hedging-Short CASH MARKETFUTURES MARKET 5/1/99 HOLD BONDS TBOND @ 97-22 5/1/99 SELL 1 CONTRACT TBOND @ 97-29 8/1/99 MARK TO MARKET TBOND @ 98-11 8/1/99 BUY CONTRACT TBOND @ 98- 17 GAIN = $3.44 @ Bond LOSS = $6.25 @ Bond NET = $2.81/ Bond X 100 Bonds = $281.00
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Interest Rate Hedging-Short CASH MARKETFUTURES MARKET 5/1/99 HOLD BONDS TBOND @ 97-22 5/1/99 SELL 1 CONTRACT TBOND @ 97-29 8/1/99 MARK TO MARKET TBOND @ 97-00 8/1/99 BUY CONTRACT TBOND @ 97- 04 LOSS = $6.88 @ Bond GAIN = $7.81 @ Bond NET = $.93/ Bond X 100 Bonds = $93.00
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