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Parker Inc. entered into a September futures contracts on February 18 to hedge the sale of silver on August 31. On February 18, the price
Parker Inc. entered into a September futures contracts on February 18 to hedge the sale of silver on August 31. On February 18, the price of silver was $26.85 per ounce and the September futures price was $27.18 per ounce. Suppose on August 31, the price of silver is $30.15 per ounce and the September futures price is $29.25 per ounce. It closes out its position on August 31. What is the effective price (after taking account of hedging) for the company($/ounce)?
A.
$32.22
B.
$30.15
C.
$26.85
D.
$28.08
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