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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