Question: Refer to Practice 19-5 and complete the following: 1. Compute the total amount (including all futures-related cash flows) that the mining company will receive to

Refer to Practice 19-5 and complete the following:

1. Compute the total amount (including all futures-related cash flows) that the mining company will receive to sell 25,000 pounds of copper in January of Year 2, assuming that the price of copper per pound on January 1 of Year 2 is (a) $0.62, (b) $0.88, and (c) $0.77. Comment on your computations.

2. Assume that the party on the other side of the futures contract was a speculator. When that speculator entered into the copper futures contract on December 1 of Year 1, which direction did the speculator think that copper prices were going to go—up or down? Explain.

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