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The question is for Derivatives class. We made a deal with another company to give them a fixed price for U.S. Gulf Coast Ultra-Low Sulfur
The question is for Derivatives class.
We made a deal with another company to give them a fixed price for U.S. Gulf Coast Ultra-Low Sulfur No 2 Diesel. Our hedging strategy is to buy future 24 heating oil contracts and sell them at the end of the month, then buy 22 heating oil contracts and sell them at the end of next month, etc. The deal contract is for 12 months Q: What is your plan to assess the profitability of a fixed price deal over the duration of the contract? P.S. Please provide a discussion of what data you will need (and how you will analyze the data) to assess the degree to which your price succeeded or failed in meeting corporate profitability objectivesStep by Step Solution
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