As CFO of the OK Oil Co you expect to have produced 10,000 barrels of oil to
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Question:
As CFO of the OK Oil Co you expect to have produced 10,000 barrels of oil to sell in May,
2021. You are concerned that the spot price of oil may drop from the current price you are
receiving of $53 per barrel. You sell ten NYMEX WTI Light Sweet Crude Oil futures contracts in
units of 1,000 barrels per contract for May delivery at $51.94 per barrel. On the settlement date
of the contracts, the spot price you can receive for the oil is $54.50. What is your gain or loss
from hedging?
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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