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This requires you to analyze the impact on earnings on three hedged relationships – Futures Contract, Forward Contract, and Option. A clear understanding of how each of these hedging instruments “works”. Below are templates and a few of the answers. For example: For the “Futures Contract To Sell” on March 31 is $600, calculated by multiplying 10,000 units (number of units per contract) by the difference between the futures price per unit ($3.50) as of February 28 and the Futures price per unit as of March 31 ($3.44). Note that the $600 is a gain since the seller can buy the commodity at $3.44 per unit on March 31 and sells it at a committed price of $3.50 per unit. However, the net impact of earnings will be the difference between this gain ($600) and the $500 ([$3.45 - $3.40] x 10,000) decline in the value of the inventory. Thus, the seller without hedging with the futures contract, the seller would have lost $500, and had gained $100 by hedging with the futures contract.