5 On June 1, an energy trader is committed to purchase 50,000 barrels of crude oil on November 15 and he wants to use the December crude oil futures (six month contracts) to hedge risk Currently the December futures price is $25 per barrel The standard deviation of monthly changes in the price of ...

To determine the number of futures contracts needed to hedge the future purchase we need to calculat ...

5. On June 1, an energy trader is committed to purchase 50,000 barrels of crude oil...

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