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A company will buy 500 units of a certain commodity in one year. It decides to hedge 50% of its exposure using futures contracts. The
A company will buy 500 units of a certain commodity in one year. It decides to hedge 50% of its exposure using futures contracts. The spot price and the futures price are currently $55 and $60 respectively. The spot price and the futures price in one year turn out to be $45 and $55 respectively. What is the average price paid for the commodity? $50 $60 $47.50 $55 None of the above
A company will buy 500 units of a certain commodity in one year. It decides to hedge 50% of its exposure using futures contracts. The spot price and the futures price are currently $55 and $60 respectively. The spot price and the futures price in one year turn out to be $45 and $55 respectively. What is the average price paid for the commodity?
$50
$60
$47.50
$55
None of the above
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Public Finance In Canada
Authors: Harvey S. Rosen, Wen, Snoddon
4th Canadian Edition
0070071837, 978-0070071834
