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7. Suppose in six months' time the cost of a liter of heating oil will either be $1.70 or $2.30. The current price is S2.00
7. Suppose in six months' time the cost of a liter of heating oil will either be $1.70 or $2.30. The current price is S2.00 per liter. a. What are the risk faced by a reseller of heating oil that has a large inventory on hand? What are the risk faced by a large user of heating oil with a very small inventory? b. How can these two parties use the hearing oil futures market to reduce their risks and lock in a price of s2.00 per liter? Assume each contract is for 50,000 liters and they each need to hedge 100,000 liters
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