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Part $1$

Your utility company will need to buy $100$ comma $000$ barrels of oil in $10$ days' time, and it is worried about fuel costs. Suppose you go long$($buy$)100$ oil futures$$ contracts, each for $1000$ barrels of$$ oil, at the current futures price of $ $60\mathrm{.}01$ per barrel.

Suppose futures prices change each day as follows. LOADING...

a$.$ What is the$$ marking$-$to$-$market profit or loss$($in dollars$)$ that you will have on each$$ 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 cumulative loss you will experience over the$10-$day period? In what case might this be a$$ problem?

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Part $1$

a$.$ What is the$$ marking$-$to$-$market profit or loss$($in dollars$)$ that you will have on each$$ date?

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$0$

$$60\mathrm{.}01$

$1$

$$59\mathrm{.}55$

$

$(0\mathrm{.}46)$

$

$(46,000)$

Part $2$

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$1$

$$59\mathrm{.}55$

$2$

$$57\mathrm{.}54$

$

$(2\mathrm{.}01)$

$

$(201,000)$

Part $3$

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$2$

$$57\mathrm{.}54$

$3$

$$57\mathrm{.}75$

$

$0\mathrm{.}21$

$

$21,000$

Part $4$

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$3$

$$57\mathrm{.}75$

$4$

$$58\mathrm{.}01$

$

$0\mathrm{.}26$

$

$26,000$

Part $5$

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$4$

$$58\mathrm{.}01$

$5$

$$59\mathrm{.}52$

$

$1\mathrm{.}51$

$

$151,000$

Part $6$

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$5$

$$59\mathrm{.}52$

$6$

$$60\mathrm{.}51$

$

$0\mathrm{.}99$

$

$99,000$

Part $7$

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$6$

$$60\mathrm{.}51$

$7$

$$60\mathrm{.}72$

$

$0\mathrm{.}21$

$

$21,000$

Part $8$

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$7$

$$60\mathrm{.}72$

$8$

$$59\mathrm{.}77$

$

$(0\mathrm{.}95)$

$

$(95,000)$

Part $9$

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$8$

$$59\mathrm{.}77$

$9$

$$61\mathrm{.}74$

$

$1\mathrm{.}97$

$

$197,000$

Part $10$

$($Round the price change to the nearest cent and the$$ profit$/$loss to the nearest$$ dollar.$)$

Day

Price

Price Change

Profit$/$Loss

$9$

$$61\mathrm{.}74$

$10$

$$62\mathrm{.}53$

$

$0\mathrm{.}79$

$

$79,000$

Part $11$

b$.$ What is your total profit or loss after $10$ days?

The total profit or loss after $10$ days is $$$

$$

$252000.($Round to the nearest$$ dollar.$)$

Part $12$

Have you been protected against a rise in oil$$ prices?$($Select from the$$ drop$-$down menus.$)$

This

$$

offsets your

$$

decrease

increase

in cost from the overall

$$

$$2\mathrm{.}57$

$$2\mathrm{.}52$

$$2\mathrm{.}47$

$$

decrease

increase

in oil prices over the $10$ days, which

$$

increases

decreases

your total cost of oil by

$$

$$142,000.$

$$262,000.$

$$252,000.$ Help me answer the last part $,$ The $----$ offsets your$------$ in the cost overall$-------$ in oil prices over the $10$ days which$-------$ your cost of oil by $------($please look at the above drop down menu to choose the right answer$).$ Thank you.