Solution-What is total amount paid for the copper

What is total amount paid for the copper

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In January, the May futures price of copper is $3.06 per pound and the spot price is $3.00. A company needs 260,000 pounds copper late April and decides to trade in May futures to hedge the price risk of copper. On April 27, the company closes its position in the futures market when the spot price is $3.04 per pound, and the May futures price is $3.05. What is total amount paid for the copper after taking into account the gains or losses on the futures contracts? Each copper futures contract is for delivery of 25,000 pounds of copper. (The number of futures contracts traded should be rounded to the nearest integer.)

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What is total amount paid for the copper

Reference no: EM132813813

Reference no: EM132813813

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