Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Hi sir please help me stepwise and dont do handwritten, also explain concept please or skip ill definitely like the answer. Just dont do on page (no handwritten)..

A hedger takes a long position in an oil futures contract on November 1, 2016 to hedge an
exposure on March 1, 2017. The initial futures price is $60 and each contract is on 1,000
barrels of oil. On December 31, 2016 the futures price is $61. On March 1, 2017 it is $64.
The contract is closed out on March 1, 2017. What gain is recognized in the accounting year
January 1 to December 31, 2017 (in $)?
What is the answer to the question above if the trader is a speculator rather than a hedger
(in $)?
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Transcribed Image Text:A hedger takes a long position in an oil futures contract on November 1, 2016 to hedge an exposure on March 1, 2017. The initial futures price is $60 and each contract is on 1,000 barrels of oil. On December 31, 2016 the futures price is $61. On March 1, 2017 it is $64. The contract is closed out on March 1, 2017. What gain is recognized in the accounting year January 1 to December 31, 2017 (in $)? What is the answer to the question above if the trader is a speculator rather than a hedger (in $)?
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