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Mogul oil refinery is planning to buy 6000 barrels of oil in 10 months. Suppose Mogul hedges the risk by buying futures on 4200.0 barrels
Mogul oil refinery is planning to buy 6000 barrels of oil in 10 months. Suppose Mogul hedges the risk by buying futures on 4200.0 barrels of oil. The current oil futures price is $21.9 dollars per barrel. If in 10 months the spot price of oil is $21.0 and the futures price is $20.9 per barrel, what is Mogul's effective cost per barrel? a. 21.70 b. 21.00 c. 21.90 d. 20.30 e. 22.00
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