In November 2020 you entered into four May 2021 long futures contracts for crude oil (1,000 barrels
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Question:
In November 2020 you entered into four May 2021 long futures contracts for crude oil (1,000 barrels per contract) for $65.00 per barrel. If the futures price was $70.00 per barrel on December 31, 2020 and $72.00 per barrel on April 9, 2021 when you closed out your position, calculate:
a) The accounting profit in 2020 and 2021 if the contract is not a hedge
b) The accounting profit in 2020 and 2021 if the contract is a hedge
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