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International Financial Management

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter10: Measuring Exposure To Exchange Rate Fluctuations

Section: Chapter Questions

Problem 33QA

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Question

In February, a company wanted to hedge the future purchase of crude oil some time in June or July by using August oil futures
contracts. The August oil futures price was $72.00 per barrel. When the company decided to buy crude oil in July, the oil spot price was
$79 and the August oil futures price was $74. Calculate the net cost of purchasing the oil with hedging.
O $72
O $74
O $77
O $79
O $81

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