I know this question has already been answered on this site but the solution did not provide me with enough explanation, Please explain why at the beginning 96 shares are entered into and please also explain why each date of the transactions are choosen. Thanks, the 96 shares that is on the solution if you look this question up it has been answered already. The first step is to enter into 96 september 2015 contracts. I am wondering how this number is calculated.
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Question 3. Assume that it is now October 2014 and a company anticipates that will need to purchase 1 million kilogram of copper in each of February 2015, August 2015, February 2016, and August 2016. The Chief Finance Officer has decided to hedge 80% of the company's exposure using copper futures. The size of one copper futures contract is 25,000 pounds of copper. The initial margin and the maintenance margin for each copper contract are $2,000 and $1,500, respectively. Contracts...
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FIGURE 14.1 Futures Prices (November 9, 2015) Futures Contracts I WSJ.com/commodities Metal & Petroleum Futures Contract Open Open High hi lo Low Settle Chg interest 2,109 90,935 211 247,319 Copper-High (CMX) -25,000 Ibs.; $ per lb. Nov 2.2380 2.2395 2.2305 2.2300 -0.0115 Dec 2.2350 2.2510 2.2260 2.2300 -0.0120 Gold (CMX)-100 troy oz.; $ per troy oz. Nov 1088.60 1088.60 1088.60 1087.90 0.30 Dec 1089.10 1094.90 1087.40 1088.10 0.40 Feb'16 1089,90 1095.50 1088.60 1089.10 0.40 April 1091.00 1095.60 1089.50 1089.90 0.40...