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Imagine American Airlines ( AA ) is concerned about fuel prices rising in the future. To minimize price risk, AA enters an agreement with a

Imagine American Airlines (AA) is concerned about fuel prices rising in the future. To minimize price risk, AA enters an agreement with a swap dealer in which it will pay the swap dealer a fixed payment of $85/bbl on July 15th 2024, in exchange for a variable payment from that swap dealer in the future which will be the August 2024 futures price on July 15th of 2024. Imagine that on July 15th of 2024, the futures price is equal to $75/bbl and the cash price is $75/bbl. In this case, what would be the net price the AA pays for crude oil in $/bbl?
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