Question
It is now June and the Ghana Cocoa Board (GCB) estimates that this year it will be buying 40,000 tons of Cocoa during the crop
It is now June and the Ghana Cocoa Board (GCB) estimates that this year it will be buying 40,000 tons of Cocoa during the crop harvest season which spans September to December. The current international market prices are as follows:
i. ii.
a. b.
Spot price is $840 per ton Future price is $915 per ton
Suppose that the spot price in September is $860 per ton, what is the hedging transaction for GCB?, analyze the results and advise accordingly.
Suppose that the spot price in December is $950 per ton, what is the hedging transaction for GCB?, analyze the results and advise accordingly.
Step by Step Solution
3.48 Rating (158 Votes )
There are 3 Steps involved in it
Step: 1
i Forward hedge rate 915 per ton Spot rate in september 860 per ton Since ...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Introduction to Management Science
Authors: Bernard W. Taylor
11th Edition
132751917, 978-0132751919
