Question: Class Example-A Short Hedge It is May 15. An oil producer has negotiated a contract to sell 1 million barrels of crude oil. The price

Class Example-A Short Hedge It is May 15. An oil producer

Class Example-A Short Hedge It is May 15. An oil producer has negotiated a contract to sell 1 million barrels of crude oil. The price in the sales contract is the spot price on August 15. The current spot price of crude oil is $19.00 per barrel, and the August crude oil futures price is $18.75 per barrel. Each futures contract is for the delivery of 1, 000 barrels of crude oil. List the transactions with which the oil producer can hedge

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