On March 1 the Price of a Commodity Is $1,000

question 19

Multiple Choice

On March 1 the price of a commodity is $1,000 and the December futures price is $1,015.On November 1 the price is $980 and the December futures price is $981.A producer of the commodity entered into a December futures contracts on March 1 to hedge the sale of the commodity on November 1.It closed out its position on November 1.What is the effective price (after taking account of hedging) received by the company for the commodity?

• A) $1,016
• B) $1,001
• C) $981
• D) $1,014

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