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2. On October 1st a bread producer purchases 100 bushels of

wheat at a spot price of €38 per bushel. On September 1st the bread
producer had hedged this planned purchase by taking a long position
of

User GeneQ
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1 Answer

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On October 1st, the bread producer purchased 100 bushels of wheat at a spot price of €38 per bushel. On September 1st, the bread producer had hedged this planned purchase by taking a long position.

Step-by-step explanation:
Taking a long position means that the bread producer entered into a contract to buy wheat at a specified price in the future. By doing this, the producer locked in the price of the wheat, protecting themselves from potential price increases. This is a common strategy used by businesses to manage the risk of fluctuating prices in the market. In this case, the bread producer secured their purchase of 100 bushels of wheat at the spot price of €38 per bushel by entering into a long position.

User FredLoh
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