Midwest Airlines is short 2 million gallons of jet fuel. Sinceno jet fuel contract exists, they decide to hedge with crude oilfutures. One 42 barrel of crude oil is needed to produce 20 gallonsof jet fuel. If one contract is for 1,000 barrels, how many crudeoil contracts will they need to properly hedge their exposure?

A) 2,000 contracts

B) 4,200 contracts

C) 20 million contracts

D) 42 million contracts

We were told answer is (B) 4,200 contracts but I do notunderstand the calculations.

Answer rating: 100% (QA)

B 4200 contracts Explanation The Midwest Airlines need 2 million gallons of jet fuel which ... View the full answer