Suppose that on october 24 2015 a company sells one april, Ask an Expert

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Suppose that on October 24, 2015, a company sells one April 2016 live-cattle futures contracts.

It closes out its position on January 21, 2016. The futures price (per pound) is 121.20 cents when it enters into the contract, 118.30 cents when it closes out its position, and 118.80 cents at the end of December 2015. One contract is for the delivery of 40,000 pounds of cattle.

What is the total profit? How is it taxed if the company is a hedger and a speculator? Assume that the company has a December 31 year end.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92853449

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