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A jewellry company sells 400 gold rings per day. Each ring uses about 0.2 of an ounce of gold. Over a year, the company uses
A jewellry company sells 400 gold rings per day. Each ring uses about 0.2 of an ounce of gold. Over a year, the company uses 600,000 ounces of gold. The company buys all of its gold on one day. The company uses CME gold futures contracts to hedge the price risk of gold. The CME futures contract calls for the delivery of 100 ounces of gold. The contract is priced in dollars and cents per ounce. To hedge the price risk, should the company buy or sell gold futures? How many contracts should the company trade? Assume that it can trade fractional contracts To hedge the price risk, should the company buy or sell gold futures? (Select the best choice below.) A. Buy O B. Sell How many contracts should the company trade? contracts (Type an integer or a decimal.)
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