Jumbo Airline, a hypothetical company, will purchase 2.5 million gallons of jet fuel in one month and hedges using heati
Posted: Wed May 18, 2022 9:27 pm
Jumbo Airline, a hypothetical company, will purchase 2.5 million
gallons of jet fuel in one month and hedges using heating oil
futures. Suppose that size of one heating oil futures is unknown.
From historical data OF=0.0325, Os= 0.0295, and p= 0.908. In
addition, the spot price is 1.95 and the futures price is 1.98
(both dollars per gallon). (2) What will be the size of heating oil
futures if 4.51 heating oil futures are required for optimal hedge
without tailing?
please explain the numbers
gallons of jet fuel in one month and hedges using heating oil
futures. Suppose that size of one heating oil futures is unknown.
From historical data OF=0.0325, Os= 0.0295, and p= 0.908. In
addition, the spot price is 1.95 and the futures price is 1.98
(both dollars per gallon). (2) What will be the size of heating oil
futures if 4.51 heating oil futures are required for optimal hedge
without tailing?
please explain the numbers