Suppose an airline company has a long hedge on 3 million gallons of jet fuel using futures contracts. The futures price at the initiation of
Suppose an airline company has a long hedge on 3 million gallons of jet fuel using futures contracts. The futures price at the initiation of the hedge was $2.00 per gallon; however, 6 months later at the time of fuel purchase, the spot price is $2.20 per gallon and the futures price is $2.18 per gallon. What is the realized cost of the jet fuel from the long hedge?
| a. | $6,060,000 | |
| b. | $6,660,000 | |
| c. | $6,360,000 | |
| d. | $6,460,000 |
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Authors: Frank Fabozzi, Steven Mann, Francesco Fabozzi
9th Edition
1260473899, 978-1260473896
