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00 The next two questions will address one of our main student learning objectives in this class which is Students will learn the principles of
00 The next two questions will address one of our main student learning objectives in this class which is "Students will learn the principles of hedging..." On March 1st the cash price of a commodity is $20 and the July futures pri is $19. On June 1 the cash price is $21 and the July futures price is $22.A company entered into a futures contract on March 1 to hedge the purchase of the commodity on June 1st. It closed out its position on June 1st. What is the effective price paid by the company for the commodity? Assume the effective price is composed of the June 1 cash price adjusted for any gains/losses from the futures market transaction. You don't need to include a dollar sign ($), just type in the number
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