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

Question 8

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 is the current period change in time value that would be recognized in earnings as of October 1? A) $260,000 B) $110,000 C) $50,000 D) $60,000 What is the current period change in time value that would be recognized in earnings as of October 1?


A) $260,000
B) $110,000
C) $50,000
D) $60,000

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