On March 1 a commodity's spot price is $400 and its June futures price is $416. On May 1 the spot price is $440 and the June futures price is $448. A company entered into futures contracts on March 1 to hedge its purchase of the commodity on May 1. The effective price that the company pays for the commodity after taking the hedge into account is: O a. $400.00 O b. $416.00 O c. $408.00 O d. $432.00

On March 1 a commodity's spot price is $400 and its June futures price is $416. On May 1 the spot price is $440 and the June futures price is $448. A company entered into futures contracts on March 1 to hedge its purchase of the commodity on May 1. The effective price that the company pays for the commodity after taking the hedge into account is: O a. $400.00 O b. $416.00 O c. $408.00 O d. $432.00

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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