Multiple Choice
A company will buy 1000 units of a certain commodity in one year.It decides to hedge 80% of its exposure using futures contracts.The spot price and the futures price are currently $100 and $90,respectively.If the spot price and the futures price in one year turn out to be $112 and $110,respectively.What is the average price paid for the commodity?
A) $92
B) $96
C) $102
D) $106
Correct Answer:
Verified
Correct Answer:
Verified
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