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An Oklahoma natural gas user hedges the December 2013 purchase with a Henry Hub futures contract expiring at the end of November 2013. The locked-in

An Oklahoma natural gas user hedges the December 2013 purchase with a Henry Hub futures contract expiring at the end of November 2013. The locked-in futures price is $2.95. ANR usually trades below Henry. To hedge basis risk the user decides to enter into a basis swap agreement for a fixed price of -$.20.

a.What is the price the user ends up paying for the gas?

b.Did the user make money on the futures?

c.Did the user make money on the swap?

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