Suppose a gold mining company has a short hedge on 1000 ounces of gold using futures contracts. The futures price at the initiation of the hedge was $1800 per ounce; however, 6 months later at the time of gold sale, the spot price is $1700 per ounce and the futures price is $1720 per ounce. What is the realized revenue of the gold from the short hedge? a. $1,720,000 b. $1,730,000 c. $1,740,000 d. $1,780,000
Suppose a gold mining company has a short hedge on 1000 ounces of gold using futures contracts. The futures price at the initiation of the hedge was $1800 per ounce; however, 6 months later at the time of gold sale, the spot price is $1700 per ounce and the futures price is $1720 per ounce. What is the realized revenue of the gold from the short hedge? a. $1,720,000 b. $1,730,000 c. $1,740,000 d. $1,780,000
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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Suppose a gold mining company has a short hedge on 1000 ounces of gold using futures contracts. The futures price at the initiation of the hedge was $1800 per ounce; however, 6 months later at the time of gold sale,
the spot price is $1700 per ounce and the futures price is $1720 per ounce. What is the realized revenue of the gold from the short hedge?
a. $1,720,000
b. $1,730,000
c. $1,740,000
d. $1,780,000
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