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Arlington Steel Company is a producer of raw steel and steel - related products. On January 3 , 2 0 2 5 , Arlington enters
Arlington Steel Company is a producer of raw steel and steelrelated products. On January Arlington enters into a firm commitment to purchase tons of iron ore pellets from a supplier to satisfy spring production demands. The purchase is to be at a fixed price of $ per ton on April To protect against the risk of changes in the fair value of the commitment contract, Arlington enters into a futures contract to sell tons of iron ore on April for $ per ton the current price On March the price of iron ore fell to $ per ton, and then increased to $ per ton on April Calculate the intrinsic value of the future contract at April
Arlington Steel Company is a producer of raw steel and steelrelated products.
On January Arlington enters into a firm commitment to purchase tons of iron ore pellets from a supplier to satisfy spring production demands. The purchase is to be at a fixed price of $ per ton on April
To protect against the risk of changes in the fair value of the commitment contract, Arlington enters into a futures contract to sell tons of iron ore on April for $ per ton the current price
On March the price of iron ore fell to $ per ton, and then increased to $ per ton on April
Calculate the intrinsic value of the future contract at April
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