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SJU Hockey produces 5,000,000 hockey pucks a year and uses 10 ounces of rubber in each puck. From their analysis they determine = 0.825, puck
SJU Hockey produces 5,000,000 hockey pucks a year and uses 10 ounces of rubber in each puck. From their analysis they determine = 0.825, puck = 0.25 & rubber = 0.33. Suppose rubber future contracts are for 160,000 ounces of rubber. How many future contracts should SJU Hockey use to hedge and should they long or short?
A) Long 278 rubber future contracts
B) Long 293 rubber future contracts
C) Long 418 rubber future contracts
D) Short 278 rubber future contracts
E) Short 293 rubber future contracts
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