Question
In: Finance
Question 6 Mogul oil company will sell 7000 barrels of oil in 3 months. Suppose Mogul...
Question 6
Mogul oil company will sell 7000 barrels of oil in 3 months. Suppose Mogul hedges the risk by selling futures on 7000 barrels of oil. The current oil futures price is $15.6 dollars per barrel. If in 3 months the spot price of oil is $15.0 and the futures price is $15.9 per barrel, what is Mogul's effective price of oil per barrel?
16.5
17.0
14.7
15.3
Question 7
Mogul oil company will sell 9000 barrels of oil in 2 months. Suppose Mogul hedges the risk by selling futures on 7200.0 barrels of oil. The current oil futures price is $21.1 dollars per barrel. If in 2 months the spot price of oil is $20.5 and the futures price is $21.8 per barrel, what is Mogul's gain on the futures transaction and effective price per barrel?
-5040.0 and 21.06
5040.0 and 19.94
5040.0 and 21.06
-5040.0 and 19.94
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Assume that you invest in oil, and you plan to sell 350,000 oil barrels in Dec...
Assume that you invest in oil, and you plan to sell 350,000 oil
barrels in Dec 2020. You think that the price of oil in Dec would
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futures contract calls for the delivery of 1,000 oil barrels and
the current futures price is $52.5 per barrel) or against a future
price reduction (hint: develop...
Assume that you invest in oil, and you plan to sell 350,000 oil barrels in Dec...
Assume that you invest in oil, and you plan to sell 350,000 oil
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be in the range of $50 – $55 per barrel. Show how would you use the
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futures contract calls for the delivery of 1,000 oil barrels and
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It is May 15. An oil producer has negotiated a contract to sell 100,000 barrels of...
It is May 15. An oil producer has negotiated a contract
to sell 100,000 barrels of crude oil. The price in the contract is
the spot price on August 15. The spot price on May 15 is $60 per
barrel and the crude oil futures price for August delivery on the
New York Mercantile Exchange (NYMEX) is $59 per barrel. Note that
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Suppose that an oil well is expected to produce 12, 00,000 barrels of oil during its...
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barrels of oil during its first production year. However, its
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