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Is it possible to construct a zero-cost collar

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Collar hedge: Using the NYMEX Crude Oil Call and Put information in the Appendix, answer the questions below.

- Is it possible to construct a zero-cost collar (at least within one cent net paid per barrel) on the collar hedging strategy?

- Why do firms use collar hedging strategies?

- If you were a refiner using a collar strategy, how would you hedge to have price protection? Explain the hedging strategy

Reference no: EM132354946

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