Assume corn spot prices over the next 3 years are $2.20, $2.35, and $2.28, respectively. The original swap price was $2.30 per bushel. If cash settlement occurs, what transaction will the counter-party make in year 2 on a 5,000-bushel swap agreement?

A)

$250 payment

B)

$250 receipt

C)

$100 payment

D)

$100 receipt

Answer:

A

Business

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