Question
1. A company will buy 1000 units of a certain commodity in one year. It decides to hedge 90% of its exposure using futures contracts.
1. A company will buy 1000 units of a certain commodity in one year. It decides to hedge 90% of its exposure using futures contracts. The spot price and the futures price are currently $100 and $90, respectively. The spot price and the futures price in one year turn out to be $112 and $110, respectively. What is the average price paid for the commodity?
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The Infographic Guide To Personal Finance
Authors: Michele Cagan CPA, Elisabeth Lariviere
1st Edition
1507204663, 978-1507204665
