1. It is currently April and a Refiner would like to hedge her July exposure to the crude oil and products markets. August crude oil
1. It is currently April and a Refiner would like to hedge her July exposure to the crude oil and products markets. August crude oil futures are trading around $80 per barrel. September gasoline futures are trading at $3 per gallon. Given that 42 gallons = 1 barrel, at what price is the forward crack spread trading?
2. It is now June and the same Refiner from the above question buys crude oil in the cash market for $75 per barrel and sells gasoline from existing inventories at $3.20 per gallon. Where is the spot crack spread trading?
Step by Step Solution
3.46 Rating (166 Votes )
There are 3 Steps involved in it
Step: 1
Answer 1 The forward crack spread can be calculated as follows Forward Crack Spread Price of Refined ...
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
