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What is the effective price per barrel paid

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It is May and a company knows that it will require 20,000 barrels of crude oil in November. It decides to trade December oil futures, whose current price is $41.00 per barrel. One oil futures contract is for delivery of 1,000 barrels. In November, when the company closes its December futures position, the spot price is $42 and the futures price is $44. What is the effective price per barrel paid by the company after taking into account the gains or losses in the futures market?

Reference no: EM132687011

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