United Airlines enters into a forward contract to buy jet fuel from an oil refinery in...
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United Airlines enters into a forward contract to buy jet fuel from an oil refinery in January 2023 at a forward price of $3.55 per gallon. If the spot price of jet fuel on maturity date (Jan 2023) is $3.30, what are United Airlines' and the refinery's payoffs from this contract? a. The long position makes $0.25 per gallon and the short loses $0.25 per gallon b. The long position loses $0.25 per gallon and the short makes $0.25 per gallon c. The long position makes $0.25 per gallon and the short loses $0.00 per gallon d. The long position makes $0.00 per gallon and the short loses $0.25 per gallon e. It depends on whether or not the contract is exercised United Airlines enters into a forward contract to buy jet fuel from an oil refinery in January 2023 at a forward price of $3.55 per gallon. If the spot price of jet fuel on maturity date (Jan 2023) is $3.30, what are United Airlines' and the refinery's payoffs from this contract? a. The long position makes $0.25 per gallon and the short loses $0.25 per gallon b. The long position loses $0.25 per gallon and the short makes $0.25 per gallon c. The long position makes $0.25 per gallon and the short loses $0.00 per gallon d. The long position makes $0.00 per gallon and the short loses $0.25 per gallon e. It depends on whether or not the contract is exercised
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Related Book For
Valuation The Art and Science of Corporate Investment Decisions
ISBN: 978-0133479522
3rd edition
Authors: Sheridan Titman, John D. Martin
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