please explain thanks 1on march 1 the price of oil is 20 and the july futures price is 19 on jun

Hello students, so let us look at this question so according to it we can say that if the actual

So looking at part one here the statement of the futures contract based on the given information

Question

On March 1, the price of oil is $20 and the July futures price is $19. On June 1, the price of oil is $24 and the July futures price is $23.50. A company entered into futures contracts on March 1 to hedge the purchase of oil on June 1. It closed out its position on June 1. a. What kind of hedge should it be? b. What is the effective price paid by the company for the oil? c. What is the basis risk? d. What would be the ideal price if the basis risk were zero? On March 1, the price of gold is $300 and the December futures price is $315. On November 1, the price of gold is $280 and the December futures price is $281. A gold producer entered into a December futures contract on March 1 to hedge the sale of gold on November 1. It closed out its position on November 1. a. What kind of hedge should it be? b. What is the effective price received by the producer for the gold? c. What is the basis risk? d. What would be the ideal price if the basis risk were zero?

          On March 1, the price of oil is $20 and the July futures price is $19. On June 1, the price of oil is $24 and the July futures price is $23.50. A company entered into futures contracts on March 1 to hedge the purchase of oil on June 1. It closed out its position on June 1.

a. What kind of hedge should it be?
b. What is the effective price paid by the company for the oil?
c. What is the basis risk?
d. What would be the ideal price if the basis risk were zero?

On March 1, the price of gold is $300 and the December futures price is $315. On November 1, the price of gold is $280 and the December futures price is $281. A gold producer entered into a December futures contract on March 1 to hedge the sale of gold on November 1. It closed out its position on November 1.

a. What kind of hedge should it be?
b. What is the effective price received by the producer for the gold?
c. What is the basis risk?
d. What would be the ideal price if the basis risk were zero?

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