You would like to lock in the selling price on 50,000 bushels of wheat, which you plan to harvest and deliver to the market in September. The September futures price quote is currently 899΄4. If you write September futures contracts on your wheat, you will be guaranteed a total price of ________ for your crop. Each contract is quoted in cents and 1/8ths of a cent per bushel with a contract size of 5,000 bushels.
A)$45,637.50
B)$541,650.00
C)$449,750.00
D)$297,700.50
E)$2,977,000.25

Question

Quizplus · Accepted Answer

To calculate the total price, we need to know how many futures contracts we need to write. 
Since each contract size is 5,000 bushels and we have 50,000 bushels of wheat, we need to write 10 contracts.

To calculate the total price, we can use the formula: 
Total Price = Futures Price x Contract Size x Number of Contracts

Plugging in the numbers, we get: 
Total Price = 899 4/8 cents/bushel x 5,000 bushels/contract x 10 contracts 
Total Price = $449,750.00

Therefore, the answer is C.

You Would Like to Lock in the Selling Price on 50,000