JTM's treasury unit bought jet fuel futures to hedge its expenses. It uses 9.5M gallon/yr....
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JTM's treasury unit bought jet fuel futures to hedge its expenses. It uses 9.5M gallon/yr. Each contract runs 42,000 gallons. The contract price locked JTM at $1.6355/gal. At maturity, JTM found that the spot price was $1.6210/gal. In effect, had they not taken the futures, they'd have paid less. What was the loss on the contract?
show formulas please.
G F B. Futures Prices Gallons Gallons/contract # of contracts Contract price Spot price Profit/(Loss)
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