Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. alberta utility needs to power its generators with

Alberta Utility needs to power its generators with oil and is afraid the price of...

50.1K

Verified Solution

Question

Finance

Alberta Utility needs to power its generators with oil and is afraid the price of oil will continue to recover from the present spot price of $38.00 after dropping to a low of $28.00. Its needs are for 98,000 barrels. Contract size is 1,000 barrels per contract. Simultaneously, Prairie Sky is looking to hedge part of it production and enters into a forward contract. Both parties are willing to deal in November futures with a forward price of $48.00 per barrel. Set up the hedge and show the profit and loss if the spot oil prices in the future, trade at $50 per barrel.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

FastTrack​ Bikes, Inc. is thinking of developing a new composite road bike. The development will take...

Civil Engineering
1.2K views

c) Use your spreadsheet to estimate the position of the Risk line, using any necessary “reality checks”....

Biology
1.2K views

How can injecting a person with a vaccine of bacteria inactivated by high heat protect...

Statistics
1.2K views

The ages in years of 10 men and their systolic blood pressures In for the...

Calculus
1.2K views

y 52 22 the cursor until the graph is correct 7 6 5 Sketch the...

Accounting
1.2K views

Problem 1-24 (Static) Different Cost Classifications for Different Purposes [LO1-1, LO1-2, LO1-3, LO1-4, LO1-5] Dozier...

Accounting
1.2K views

Question 2( 25 Marks) Part A (13 Marks) Gildan Limited...

Accounting
1.2K views

Additional information: As of February 1, 2022, current assets were $129,492 and current liabilities were...

Accounting
1.2K views

A local government has four federal grants. Expenditures during the year ended June 30, 2020,...

Accounting
1.2K views

Tofu Tacos Inc. borrowed $502,000 on November 1, 2021 by signing a 9-month note bearing...

Accounting
1.2K views

14. (1 point) Which of the following is consistent with for explaining both a favorable...

Finance
1.2K views

Question 8 (1 point) You have been asked to estimate the market value of an...