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On june 1st a coffee manafacturer plans to produce 3000 pounds of coffee in 30 days. To partilly headge the risk, it goes long 15
On june 1st a coffee manafacturer plans to produce 3000 pounds of coffee in 30 days. To partilly headge the risk, it goes long 15 coffeeutures contracts for delivery in 3 months(september 1st). Each contract is for delivery of 100 pounds of coffee. On june 1st the spot price is 10 per pound and futures price is 11 per pound. On june 31st the spot price of coffee is 12 per pound and the futures price is 11.50 per pound. Whathe manafacturers effective purchse price for coffee
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