Petrochemical Parfum (PP) is concerned about a possible increase in the price of heavy fuel...
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Finance
Petrochemical Parfum (PP) is concerned about a possible increase in the price of heavy fuel oil, which is one of its major inputs. If PP could use either options or futures contracts to protect itself against a rise in the price of crude oil, compute the payoffs in each case would vary if the oil price were $70, $80, or $90 a barrel. Assume the current price of oil is $70 per barrel, the futures price is $80, and the option exercise price is $80.
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