Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2019, Owen and Lisa exchange land they both held separately for investment. Lisa gives up a 2 acre property in Texas with an adjusted basis of $2,000 and a fair market value of $6,000. In return for this property, Lisa receives from Owen a 1 acre property in Arkansas with a fair market value of $5,500 and cash of $500 cash of $500.. Owen’s adjusted basis in the land he exchanges is $2,500. In March 2020, Owen sells the Texas land to a third party for $5,800.
Suppose each orange juice futures contract is for 15,00015,000 pounds of orange juice and the current futures price is F_0 = 118.65F0?=118.65 cents-per-pound. Assuming that the farmer has enough cash liquidity to fund any margin calls, what is the risk-free price that she can guarantee herself.
August 27, 2020
4:49 pm
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