Exhibit 4.1: Managing Financial risk Example 1 He would sell four contracts in May totaling 20.000 bushels in the futures market 20,000×$490=$98,000 In December he would buy four contracts to offset his futures position If the market price of corn drops to $4. 50 per bushel, cost is 20,000 X$4.50= 90,000 If the market price of corn increases to $5.00 per bushel, cost is 20,000 X $5.00=$100,000Exhibit 4.1: Managing Financial Risk – Example 1 • He would sell four contracts in May totaling 20,000 bushels in the futures market. – 20,000 x $4.90 = $98,000 • In December, he would buy four contracts to offset his futures position. – If the market price of corn drops to $4.50 per bushel, cost is 20,000 x $4.50 = 90,000 – If the market price of corn increases to $5.00 per bushel, cost is 20,000 x $5.00 = $100,000