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. 50 $541650.00.
c. $449750.00.
d. $297700.50.
e. $2.971.000.

c. $449750.00.

Explanation:

1/8 of 10 lots of bushels of 5,000 per lot = 1.25

Therefore, the price quote of 899'4 cents is written as 899'4+1.25 = $8.995

Total value = Wheat(bushels) * Price Quote

Total value = 50,000 * $8.995

Total value = $449,750

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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