On March 1 the price of oil is $60 and the July futures price is $59.  On June 1 the price of oil is $62 and the July futures price is $63.50.  A company entered into a futures contracts on March 1 to hedge the purchase of oil on June 1.  It closed out its position on June 1.  After taking account of the cost of hedging, what is the effective price paid by the company for the oil?

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To determine the effective price paid by the company for the oil after hedging with a futures contra... View the full answer