On March 1 a Commodity's Spot Price Is $60 and Its

question 13

Multiple Choice

On March 1 a commodity's spot price is $60 and its August futures price is $59.On July 1 the spot price is $64 and the August futures price is $63.50.A company entered into futures contracts on March 1 to hedge its purchase of the commodity on July 1.It closed out its position on July 1.What is the effective price (after taking account of hedging) paid by the company?

• A) $59.50
• B) $60.50
• C) $61.50
• D) $63.50

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Definitions:

SWOT Analysis

A strategic planning tool that evaluates the Strengths, Weaknesses, Opportunities, and Threats of an organization or project.

Opportunity Costs

The lost potential gain from other options when one option is chosen.

Nonmonetary Costs

Costs not easily quantified in monetary terms, including time, effort, and emotional investment made by consumers in association with a purchase.

Marketers

Professionals or organizations that engage in activities designed to identify, anticipate, and satisfy customer needs profitably.