Phoenix Motors wants to lock in the cost of 10,000 ounces of platinum to be used in next quarters production of catalytic converters. It buys 3-month futures contracts for 10,000 ounces at a price of $990 per ounce.

a. Suppose the spot price of platinum falls to $845 in 3 months time. Does Phoenix have a profit or loss on the futures contract?

b-1. Has it locked in the cost of purchasing the platinum it needs?

b-2. What is the total lock-in cost?

c. If the spot price of platinum increases to $1,045 after 3 months, does Phoenix have a profit or loss on the futures contract?

d. What is the total lock-in cost?