On March 1 a commoditys spot price is $58 and its August futures price is $59. On
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Question:
On March 1 a commodity’s spot price is $58 and its August futures price is $59. On July 1 the spot price is $63 and the August futures price is $62. A company entered into futures contracts on March 1 to hedge its purchase of the commodity on July 1. It closed out its position on July 1. What is the effective price (after taking account of hedging) paid by the company?
A. $59
B. $60
C. $61
D. $62
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: