A 6-Month Forward Contract for Corn Exists with a Price

Multiple Choice

A 6-month forward contract for corn exists with a price of $1.70 per bushel.If Farmer Jayne decides to hedge her 20,000 bushels of corn with the forward contract,what is her profit or loss if spot prices are $1.65 or $1.80 when she sells her crop in 6 months? Her total costs are $33,000.

A) $1,000 gain or $1,000 loss
B) $0 gain or $3,000 gain
C) $0 loss or $3,000 loss
D) $1,000 gain or $1,000 gain