Your oil refinery will need to buy 250,000 barrels of crude oil in one week and it is worried about crude oil prices.Suppose you go long 250 crude oil futures contracts,each for 1000 barrels of crude oil,at the current futures price of $68 per barrel.Suppose futures prices change each day over the next week as follows:
What is the daily and cumulative mark to market profit or loss (in dollars)that you will have on each of the next five days?
Definitions:
Promissory Note
A written, legally binding promise to pay a specified sum of money on a certain date or upon demand.
Face Amount
The nominal or dollar value printed on a financial instrument, such as a bond or life insurance policy, representing the amount due at maturity.
Maturity Value
The amount payable to an investor at the maturity date of an investment, including the principal and any remaining interest.
Maker
The party in a financial transaction who creates or issues the instrument, such as a check writer or bond issuer.
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