Question: On Jan 1, 2016, I bought two Dec 2017 orange juice forward contracts at $5 per contract. The size of each contract is 1 gallon
On Jan 1, 2016, I bought two Dec 2017 orange juice forward contracts at $5 per contract. The size of each contract is 1 gallon of orange juice. There is no margin requirement for these forward contracts, which are only settled at maturity. When I purchased the forward contracts, the spot market price of orange juice is $4.5 per gallon. On Jan 1, 2016, we paid $________ dollars for the contract. On Jan 1, 2016, we received ______ gallons of orange juice. In November 2017, the price of orange juice in the spot market jumped from $4.50 to $6.00: In November 2017, we received a cash flow of $_______ dollars. On the delivery day in December 2017, we paid $________ dollars. On the delivery day in December 2017, we received _______ gallons of orange juice
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