It is January 15. a company knows it will require 100,000 barrels of oil on May 15.

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It is January 15. a company knows it will require 100,000 barrels of oil on May 15. the spot price of oil is $75.00 per barrel and the May futures price is $78.50 per barrel. each contract is for the delivery of 1,000 barrels of oil. if it hedges.

How much profit does it make on its futures position if the May 15 spot price turns out to be $80.00?

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Corporate Finance

ISBN: 978-0133097894

3rd edition

Authors: Jonathan Berk and Peter DeMarzo

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Posted Date: May 04, 2023 12:02 AM

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It is January 15. a company knows it will require 100,000 barrels of oil on May 15.

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If the company hedges its oil requirement by buying futures contracts it can lock in the price of oi... View the full answer

Corporate Finance

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