Refer toFigure 24.6 belowto answer this question. Suppose today is May 25, 2018, and your firm is a jewellery manufacturer that needs 1,700 ounces of gold in October for the fall production run. You would like to lock in your costs today, because you're concerned that gold prices might go up between now and October. Assume that the hedge is market to market.

a.How could you use gold futures contracts to hedge your risk exposure? What price would you be effectively locking in?(Omit $ sign in your response.)

Total cost$_____________________

b.Suppose gold prices are $1,060 per ounce in October. What is the profit or loss on your futures position?(Input the amount as positive value.Omit $ sign in your response.)

$___________________________

FIGURE 24.6 Future prices (May 27, 2018) Commodity Futures Price Quotes for Canadian Dollar (Globex) (Price quotes for CME Canadian dollar (Globex) delayed at least 10 minutes as per exchange requirements.) Also available: pit. Session Quotes Current Session Prior Day Open High Low Last Time Set Chg Vol Set Op Int Opt's Jun 18 0.77675 0.77695 0.77025 0.77110 16:23 May 25 -0.00545 83631 0.7686 126984 Call Put Sep 18 0.77825 0.77825 0.77195 0.77225 16:23 May 25 -0.00545 2221 0.77795 17157 Call Put Dec'18 0.77830 0.77830 0.77340 0.77415 16:23 May 25 -0.00540 181 0.77925 3652 Call Put Mar' 19 0.77500 0.77590 0.77470 0.77550 16:23 May 25 -0.00540 7 0.78050 99 Call Put Jun'19 0.77805 0.77805 0.77600 0.77600# 16:23 May 25 0.00540 0.78160 24 Call Put Sep 19 0.78330* 16:23 May 25 0.78260 "An asterisk beside the last price BAX-Three-Month Canadian Bankers' Acceptance Futures Last Update: May 27, 2018, 6 p.m. Montreal time (Data 15 minutes delayed) Month / Strike Bid Price Ask Price Settle Price Net Change Open Int. Vol. Jun-18 98.205 98.210 98.210 0.000 194.893 16.043 Jul-18 0.000 0.000 98.110 0.000 Aug-18 0.000 0.000 98.06 0.000 ep-18 98.005 90.010 98.010 0.000 165,324 17.717 Dec-18 97.810 97.815 97.810 0.000 195.168 0.564 Mar- 19 7.645 97.650 27.64 .005 178,805 14,975 Jun-1 7.530 97.540 753 005 101.977 8.497 ep-19 97.455 97.460 27.45 0.005 67,180 14.042 ec-19 7.400 97.40 7.395 0.010 5,7800 8,342 Mar-20 7.345 97.35 97.34 19.423 1,151 un-20 7.260 97.330 97.300 0.060 5.32 206 ep-20 0.000 0.00 97.260 ).000 3.190 Dec-20 0.000 0.000 97.220 0.000 1,973 10 Mar-21 0.000 0.000 97.180 0 000 846 10 Total 111,557 Commodity Futures Price Quotes for Gold (Globex) (Price quotes for COMEX Gold (Globex) delayed at least 10 minutes as per exchange requirements.) Also available: pit. Session Quotes Current Session Prior Day Open High Low Last Time Set Chg Vol Set Op Int Opt's May' 18 - 1292.1 1287.4 1292.1 18:01 May 25 1303.3 -0.4 1303.7 2 Call Put Jun 18 1304.0 1307.2 1299.4 1301.2 18:01 May 25 1303.7 -0.7 286525 130.4.4 107286 Call Put Jul' 18 1307.1 1309.6 1302.3 1303.9 18:01 May 25 1306.4 -0.9 1517 1307.3 713 Call Put Aug'18 1309.0 1312.6 1304.6 1306.5 18:01 May 25 1309.0 -0.8 95181 1309.8 258891 Call Put Oct' 18 1316.8 1318.7 1311.4 1312.1 18:01 May 25 1315.2 -0.9 1683 1316.1 10697 Call Put Dec'18 1322.7 1325.2 1317.8 1318.5 18:01 May 25 1321.7 -0.9 5701 1322.6 76057 Call Put Feb'19 1326.9 1330.2 1325.0 1325.0 18:01 May 25 1328.1 -0.9 173 1329.0 11769 Call Put Apr'19 1335.5 1335.5 1333.3 1334.7 18:01 May 25 1334.4 -1.0 162 1335.4 3535 Call Put Jun 19 1340.3 1341.3 1340.3 1341.3 18:01 May 25 1341.1 -1.0 81 1342.1 3603 Call Put Aug'19 1347.2 1347.4 1346.5 1346.5 18:01 May 25 1347.8 -1.0 43 1348.8 420 Call Put Oct 19 1352.0 1352.0 1351.0 1351.0 18:01 May 25 1354.6 -1.0 6 1355.6 35 Call Put Dec 19 1360.2 1361.8 1360.2 1360.9 18:01 May 25 1361.4 -1.0 15 1362.4 3968 Call Put Feb'20 1370.0 18:01 May 25 1368.2 -1.0 1369.2 Call Put Jun'20 1386.0 18:01 May 25 1382.1 -1.0 1383.1 273 Call Put Dec'20 1405.3 18:01 May 25 1403.2 -1.0 1404.2 2863 Call Put Jun 21 1345.4 18:01 May 25 1424.7 -1.0 1425.7 185 Call Put Dec 21 1474.0 18:01 May 25 1446.2 -1.2 1447.4 200 Call Put Jun'22 1382.7 18:01 May 25 1467.1 -1.7 1468.8 5 Call Put Dec'22 1519.0 18:01 May 25 1488.0 -2.3 1490.3 11 Call Put Jun 23 1441.1 18:01 May 25 1508.7 -2.7 1511.4 5 Call Put Light Crude Oil (Price quotes for NYMEX Light Crude Oil delayed at least 10 minutes as per exchange requirements.) Also available: pit. Session Quotes Current Session Prior Day fixed Open High Low Last Time Set Chg Vol Set Op Int Opt's Aug'18 70.53 70.67 67.33 67.42 18:04 May 25 67.88 -2.83 178569 70.58 244456 Call Put Sep 18 70.14 70.26 67.02 67.09 18:04 May 25 67.78- -2.80 113847 70.19 258898 Call Put Oct' 18 69.72 69.72 66.65 66.70 18:04 May 25 67.06 -2.63 83171 69.69 179582 Call Put Nov 18 69.26 69.26 66.32 66.41 18:04 May 25 66.72 -2.51 44135 69.23 115532 Call Put Dec'18 68.71 68.79 65.95 66.04 18:04 May 25 66.36 -2.43 133701 68.79 307888 Call Put Jan 19 68.28 68.28 65.62 65.62 18:04 May 25 66.01 -2.35 29692 68.36 121266 Call Put Feb'19 67.67 67.67 65.21 65.38 18:04 May 25 65.58 -2.27 10267 67.85 63597 Call Put Mar'19 67.34 67.34 64.77 64.83 18:04 May 25 65.11 -2.23 19324 67.34 75968 Call Put Apr' 19 66.84 66.84 64.32 64.52 18:04 May 25 64.66 -2.19 3502 66.85 38324 Call Put May' 19 66.25 66.25 63.92 64.01 18:04 May 25 64.23 -2.15 2212 66.38 3361 Call Put Jun'19 65.93 65.93 63.48 63.61 18:04 May 25 63.82 -2.11 35182 65.93 147870 Call Put Jul'19 65.27 65.27 63.37 63.41 18:04 May 25 63.39 -2.07 1924 65.46 32399 Call Put Aug 19 66.00 64.40 64.80 18:04 May 25 62.97 -2.04 681 65.01 27621 Call Put Sep 19 63.21 63.25 62.55 62.55 18:04 May 25 62.59 -2.01 3181 64.60 45263 Call Put Oct 19 62.30 62.30 62.30 62.30 18:04 May 25 -1.98 656 64.22 25781 Call Put Nov' 19 63.45 18:04 May 25 61.91 -1.95 1192 63.86 27834 Call Put Dec' 19 63.50 63.57 61.29 61.39 18:04 May 25 61.61 -1.93 50822 63.54 175133 Call Put Jan 20 63.15 63.15 63.15 63.15 18:04 May 25 61.24 -1.91 1149 63.15 20995 Call Put Feb'20 63.13 63.13 63.13 18:04 May 25 60.89 -1.89 205 62.78 7224 Call Put Mar'20 62.27 62.27 62.27 18:04 May 25 60.56 -1.86 570 62.42 13063 Call Put Apr'20 52.00 18:04 May 25 60.26 -1.83 24 62.09 2824 Call Put May 20 18:04 May 25 59.98 -1.80 23 61.78 2991 Call Put Jun 20 61.41 61.48 59.43 59.76 18:04 May 25 59.71 -1.76 7814 61.47 30184 Call Put Jul'20 55.44 18:04 May 25 59.41 -1.73 76 61.14 3304 Call Put Aug 20 49.90 18:04 May 25 59.13 -1.71 108 60.84 3602 Call Put Sep'20 56.57 18:04 May 25 -1.71 294 60.54 6147 Call Put Trading Unit: 1,000 U.S. barrels source: (Canadian Dollar, up Inc., All Product Search, retrieved on June 2018, https://www ducts/; (BAX Three-month TMX Group Limit n "as is" basis with the mates make no representation material and disdains all liability in connection with the sar Neither TMX Group Limited ange. IMX Group Limited and its affiliates do not endorse