Problem $27-4$ Futures and options

A gold$-$mining firm is concerned about short$-$term volatility in its revenues. Gold currently sells for $$1,210$ an ounce, but the price is

extremely volatile and could fall as low as $$1,130$ or rise as high as $$1,290$ in the next month. The company will bring $1,000$ ounces to

the market next month.

Note: Enter your answers in millions rounded to $2$ decimal places.

a$.$ What will be total revenues if the firm remains unhedged for gold prices of $$1,130,$$$1,210,$ and $$1,290$ an ounce?

b$.$ The futures price of gold for delivery one month ahead is $$1,304.$ What will be the firm's total revenues at each gold price if the

firm enters into a one$-$month futures contract to deliver $1,000$ ounces of gold?

c$.$ What will be total net revenues if the firm buys a one$-$month put option to sell gold for $$1,210$ an ounce? The put option costs $$116$

per ounce.

Complete this question by entering your answers in the tabs below.

What will be total revenues if the firm remains unhedged for gold prices of $$1,130,$$$1,210,$ and $$1,290$ an ounce?