Suppose that in September 2018 a company takes a long position in a contract on May 2019
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Suppose that in September 2018 a company takes a long position in a contract on May 2019 crude oil futures. It closes out its position in March 2019. The futures price (per barrel) is $48.30 when it enters into the contract, $50.50 when it closes out its position, and $49.10 at the end of December 2018. One contract is for the delivery of 1,000 barrels. What is the company's total profit? When is it realized? How is it taxed if it is (a) a hedger and (b) a speculator? Assume that the company has a December 31 year-end.
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The total profit is 5050 4830 1000 2200 Of this 4910 4830 1000 or 800 is ...View the full answer
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