Question
This and the following three questions are related: Suppose that you are a major airline that has budgeted a price of fuel of 1.3840 USD/gal
This and the following three questions are related: Suppose that you are a major airline that has budgeted a price of fuel of 1.3840 USD/gal for fiscal year 2021 and you plan to end up buying 1 million gallons of it. To hedge against possible increases in the price you buy a one-year call option with a strike price of 1.4539 USD/gal for 1 million gallons with a premium of 1 cent/gal.
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
12th Edition
0136096689, 978-0136096689
