Starco Corp. wishes to purchase 8,000 shares of Gertrom Ltd., a publicly traded company. Starco contracts to buy the shares from a related party, Unit Ltd., for $73 per share in 120 days' time. The fair value was $73 per share on this day. One month later, at year-end, the fair value of the Gertrom shares is $62 per share, and it is $68 per share at the end of 120 days. At that time, the shares are bought, and the contract is closed out. Required: 1. Is this a forward contract or a futures contract? Explain. 2. What risk is the company hedging? 3. Prepare journal entries to record the inception of the contract, the change in its fair value at year-end, and its maturity. Starco Corp. wishes to purchase 8,000 shares of Gertrom Ltd., a publicly traded company. Starco contracts to buy the shares from a related party, Unit Ltd., for $73 per share in 120 days' time. The fair value was $73 per share on this day. One month later, at year-end, the fair value of the Gertrom shares is $62 per share, and it is $68 per share at the end of 120 days. At that time, the shares are bought, and the contract is closed out. Required: 1. Is this a forward contract or a futures contract? Explain. 2. What risk is the company hedging? 3. Prepare journal entries to record the inception of the contract, the change in its fair value at year-end, and its maturity.