1. According to our textbook, the central (primary) goal of financial management is to:
Maximize net income.
Minimize income taxes.
Maximize shareholder wealth.
Minimize firm risk.
2. You are the buyer for a cereal company and you must buy 80,000 bushels of corn next month. The futures contracts on corn are based on 5,000 bushels and are currently quoted at 415′0 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 16; $2,075
b) Buy 16; $20,750
c) Buy 16; $2,075,000
d) Sell 16; $2,075