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A company will buy 1 0 0 0 units of a certain commodity in one year. It decides to hedge 8 0 % of its
A company will buy units of a certain commodity in one year. It decides to hedge of its exposure using futures contracts. The current Spot price is $ the one year futures price of the commodity is $ If the spot price and the futures price in one year turn out to be $ and $ respectively.
a What is the effective price per unit the company will pay for the hedged commodities? pts
b Overall, what is the average unit price paid for the commodity?
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