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JL Distribution (JLD) plans to hedge its November purchase of crude oil. JLD will employ a long futures market hedge. 5 pts a. To hedge

JL Distribution (JLD) plans to hedge its November purchase of crude oil. JLD will employ a long futures market hedge. 5 pts

a. To hedge the November spot market crude oil purchase, what will be JLDs trades in the futures market look like?

b. If crude oil prices go down will JLD make a profit or loss on its hedge position?

c. Describe, briefly and specifically, how JLDs futures market position hedges the price risk of purchasing the crude oil.

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