Show how Petrochemical Parfum can also use futures contracts to protect itself against a rise in the
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Show how Petrochemical Parfum can also use futures contracts to protect itself against a rise in the price of crude oil. Show how the payoffs would vary if the oil price is $80, $90, or $100 a barrel. Assume the futures price is $90 per barrel. What are the advantages and disadvantages for Petrochemical of using futures rather than options to reduce risk? Repeat the exercise for Onnex.
Oil price (1)................. $80.00
Oil price (2)................. $90.00
Oil price (3) ............... $100.00
Number of barrels ...... 1,000.00
Future price................. $90.00
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0078034640
7th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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