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PLEASE SOLVE IT BY YOUR OWN WORDS ( A, B AND C ) 6. Your utility company will need to buy 115,000 barrels of oil
PLEASE SOLVE IT BY YOUR OWN WORDS ( A, B AND C ) 6. Your utility company will need to buy 115,000 barrels of oil in 10 days' time, and it is worried about fuel costs. Suppose you go long 115 oil futures contracts, each for 1000 barrels of oil, at the current futures price of $60 per barrel. Suppose futures prices chance each dav as follows: a. What is the mark-to-market profit or loss (in dollars) that you wil have on each date? b. What is your total profit or loss after 10 days? Have you been protected against a rise in oil prices? c. What is the largest curnulative loss you will experience over the 10-day perod? In what case might this be a
( A, B AND C )
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