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On August 1, an Oil Producer Decided to Hedge the Fair

Question 28

Multiple Choice

On August 1, an oil producer decided to hedge the fair value of its inventory by acquiring a futures contract to sell 100,000 barrels of oil on November 1 for $85.00 each. Price data follow: On August 1, an oil producer decided to hedge the fair value of its inventory by acquiring a futures contract to sell 100,000 barrels of oil on November 1 for $85.00 each. Price data follow: What was the fair value of the contract on October 1? A) $280,000 B) $110,000 C) $260,000 D) $20,000 What was the fair value of the contract on October 1?


A) $280,000
B) $110,000
C) $260,000
D) $20,000

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