Peruvian organic coffee price
Assume that in 4 months the cost of a pound of Peruvian organic coffee will be either $2.5 or $4.5. The current price is $3.5 per pound.
(a) What are the risks faced by a coffee chain who is a large purchaser of coffee?
(b) What are the risks faced by a Peruvian coffee farmer?
(c) If the delivery price of coffee turns out to be $4.5, should the farmer have forgone entering into a futures contract? Why or why not?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/peruvian-organic-coffee-price-jkt3