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 buy 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 thousands)that you will have on each of the next five days?
Definitions:
Tariff Revenue
Income generated by the government from taxes imposed on imported goods, used as a tool for economic policy.
World Price
The global market cost of a good or service, shaped by worldwide demand and supply factors.
Tariff
A tariff is a tax imposed on imported goods and services, intended to make foreign products more expensive and protect domestic industries.
Import Quota
A government-imposed limit on the quantity of a specific good that can be imported into the country over a set period of time.
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