Like almost any investment strategy, hedging has both advantages and disadvantages. Suppose that you are a wheat farmer who has just planted a crop.

Like almost any investment strategy, hedging has both advantages and disadvantages. Suppose that you are a wheat farmer who has just planted a crop. You estimate your total costs of production at $4 per bushel. You are going to sell your entire crop at harvest in four months. You expect the price of wheat to be $7 per bushel at harvest, but that could vary substantially. You have the opportunity now to enter a contract that will obligate you to sell your crop in four months for $7 per bushel. Would you enter this contract? Explain why or why not.