Q3) Suppose that on November 15th, 2021 a company purchased ( i.e. long) one May 2022 live cattlefutures contract. One contract is for the delivery of 40,000 pounds of cattle. It closed out its position onFebruary 18th, 2022. The futures price ( per pound) was 135 cents when it entered into the contract, and139 cents when it closed out its position. The futures price at the end of the year on December 31, 2021was 136 cents. Assume the company has a Dec 31 year end for tax purposes.What is the total profit? How is it taxed if the company is (a) a hedger, and (b) a speculator ?

A futures contract is a derivative instrument to purchase or sell an underlying asset on a future…

Answered: Q3) Suppose that on November 15th, 2021…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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