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Business, 05.05.2020 06:42 jerenasmith8

Seth takes a job with OC Tanner to hedge the gold the company will be using to make their recognition jewelry. He is looking at hedging 500 ounces of gold for December and finds the current December gold futures contract trading at $1,300 per ounce and that each contract consists of 100 ounces and that each contract has an initial margin of $5,000 with a maintenance margin of $3,500. He anticipates the basis being a negative $5 per ounce and handling and transportation costs from a futures exchange site being $3 per ounce. The tick size is $0.10.

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