You are a candy manufacturer, specializing in chocolate toffee (yum!). You have just received an order...

You are a candy manufacturer, specializing in chocolate toffee (yum!). You have just received an order which requires the purchase of 130 tons of cocoa over six months. Relevant contract specs for cocoa are:

	*Close Price/ton*	*Number of Contracts*	*Contract size*	*Tic Size*	*Tic Value*
Spot	US$2668		-	-	-
Dec’20	US$2641	4	10 tons	$1/ton	US$10 .00
Mar’21	US$2623	3	10 tons	$1/ton	US$10 .00
May’21	US$2611	3	10 tons	$1/ton	US$10 .00
Jul’21	US$2602	3	10 tons	$1/ton	US$10 .00

What was the total cost of delivery, assuming no hedge?

Expert Solution

Cost of delivery = closing price per ton *No.of contracts *contract size

excel

jeff jeffy answered 2 years ago

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