QUESTION 5

Suppose a gold mining company has a short hedge on 1000 ounces of gold using futures contracts. The futures price at the initiation of the hedge was $1800 per ounce; however, 6 months later at the time of gold sale, the spot price is $1700 per ounce and the futures price is $1720 per ounce. What is the realized revenue of the gold from the short hedge?

	a.	$1,720,000
	b.	$1,730,000
	c.	$1,740,000
	d.	$1,780,000