You Need 70,000 Bushels of Corn for Your Production Operations

Multiple Choice

You need 70,000 bushels of corn for your production operations next month. The futures contracts on corn are based on 5,000 bushels and are currently quoted at 371.25 cents per bushel for delivery next month. If you want to hedge your cost, you should ________ contracts at a cost of ________ per contract.

A) Buy 12; $2,570
B) Buy 14; $18,562.50
C) Buy 16; $22,570.00
D) Sell 14; $18,562.50
E) Sell 16; $22,570.00