Use the following returns for X and Y. Returns Year Y 21.5% -16.5 1 25.5% - 3.5 27.5 - 14.0 31.5 2 3 9.5 4 19.0 4.5 a. Calculate the average returns for X and Y. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the variances for X and Y. (Do not round intermediate calculations and round your answers to 6 decimal places, e.g., 32.161616.) c. Calculate the standard deviations for X and Y. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
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- 5.3 The sales decay for a product is given by S = 20,000e−0.7x, where S is the monthly sales and x is the number of months that have passed since the end of a promotional campaign. (Round your answers to two decimal places.) (a) What will be the sales 5 months after the end of the campaign?$ (b) How many months after the end of the campaign will sales drop below 1000, if no new campaign is initiated? monthsdata given: State of Economy Probability T Bills Phillips Payup Rubbermade Market Index Recession 0.2 7 -22 28 10 -13 Below Average 0.1 7 -2 14.7 -10 1 Average 0.3 7 20 0 7 15 Above Average 0.3 7 35 -10 45 29 Boom 0.1 7 50 -20 30 43 Mean (%) 7 16.9 2.07 19.6 15 Variance (%) ^2 0 549.09 244.124 358.04 313.6 Standard deviation(%) 0 23.4326695 15.6244712 18.92194493 17.7087549 Coefficient of Variation Covariance with MP Correlation with Market IndexD & R A1 10 - 5 Question 10. Minimum Variance Commodity Hedge Choc Full of Good Inc., a producer of powdered hot chocolate, has just received a large order that will require the purchase of 800 metric tons of cocoa in 3 months. The current spot price of cocoa is US $3,055 per metric ton. The standard deviation of the change in spot cocoa price is 0.2. Mr. Dulce, the CFO of Choc Full, is considering a minimum-variance hedge of this future cocoa purchase using the three-month cocoa futures contract. The contract size is 10 metric tons. The standard deviation of the change in cocoa futures price is 0.25. The covariance between the change in the spot and futures cocoa price is 0.035. The annually compounded interest rate faced by the company is 5%, the three-month storage cost is $2.5 per metric ton, and the convenience yield is $0.5 per metric ton. How many contracts should be traded?
- D & R A1 10 - 2 Question 10. Minimum Variance Commodity Hedge Choc Full of Good Inc., a producer of powdered hot chocolate, has just received a large order that will require the purchase of 800 metric tons of cocoa in 3 months. The current spot price of cocoa is US $3,055 per metric ton. The standard deviation of the change in spot cocoa price is 0.2. Mr. Dulce, the CFO of Choc Full, is considering a minimum-variance hedge of this future cocoa purchase using the three-month cocoa futures contract. The contract size is 10 metric tons. The standard deviation of the change in cocoa futures price is 0.25. The covariance between the change in the spot and futures cocoa price is 0.035. The annually compounded interest rate faced by the company is 5%, the three-month storage cost is $2.5 per metric ton, and the convenience yield is $0.5 per metric ton. Should the company long or short cocoa futures?D & R A1 10 - 1 Question 10. Minimum Variance Commodity Hedge Choc Full of Good Inc., a producer of powdered hot chocolate, has just received a large order that will require the purchase of 800 metric tons of cocoa in 3 months. The current spot price of cocoa is US $3,055 per metric ton. The standard deviation of the change in spot cocoa price is 0.2. Mr. Dulce, the CFO of Choc Full, is considering a minimum-variance hedge of this future cocoa purchase using the three-month cocoa futures contract. The contract size is 10 metric tons. The standard deviation of the change in cocoa futures price is 0.25. The covariance between the change in the spot and futures cocoa price is 0.035. The annually compounded interest rate faced by the company is 5%, the three-month storage cost is $2.5 per metric ton, and the convenience yield is $0.5 per metric ton. What is the futures price per metric ton of cocoa?D & R A1 10 - 4 Question 10. Minimum Variance Commodity Hedge Choc Full of Good Inc., a producer of powdered hot chocolate, has just received a large order that will require the purchase of 800 metric tons of cocoa in 3 months. The current spot price of cocoa is US $3,055 per metric ton. The standard deviation of the change in spot cocoa price is 0.2. Mr. Dulce, the CFO of Choc Full, is considering a minimum-variance hedge of this future cocoa purchase using the three-month cocoa futures contract. The contract size is 10 metric tons. The standard deviation of the change in cocoa futures price is 0.25. The covariance between the change in the spot and futures cocoa price is 0.035. The annually compounded interest rate faced by the company is 5%, the three-month storage cost is $2.5 per metric ton, and the convenience yield is $0.5 per metric ton. Compute the minimum-variance hedge ratio.
- Ma3. The S&P 500 Index returned: 5.1%, 6.9%, -7.3%, -8.1%, 7.2% Over the same period, BergAwesome Inc. had the following returns: 4.8%, 7.3%, -6.2%, -11.7%, 8.6% How much of the variability in BergAwesome is explained by the variability in the S&P 500 Index (R2)? (%)? (recurring content question)11.6 Calculating Returns and Standard Deviations Based on the following information, calculate the expected return and standard deviation: State of Economy Probability of SE Rate of Return If State Occurs Depression .15 -.148 Recession .30 .031 Normal .45 .162 Boom .10 .348Question 56: When using Solver, only one variable can be adjusted. Answer: A. TrueB. False Question 57: What is the net income value at the breakeven point? Answer: A. Maximum possible amount, given sales level B. Minimum possible amount, given sales level C. $0 D. $100,000
- Problem 6-30 Yield Curve (LO4) The following table shows the prices of a sample of Treasury strips. Each strip makes a single payment at maturity. Years to Maturity Price, (% of face value) 1 98.652 % 2 95.151 3 91.344 4 87.280 d. What is the 4-year interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) e. Is the yield curve upward-sloping, downward-sloping, or flat? f. Is this the usual shape of the yield curve?Q.9 KARA Corporation's CFO uses this equation, which was developed by regressing inventories on sales over the past 5 years, to forecast inventory requirements: Inventories = P22.0 + 0.125(Sales). The company expects sales of P300 million during the current year, and it expects sales to grow by 25% next year. What is the inventory forecast for next year?Company A 7/8/13/2 Company B 10/6/16/6 a. Calculate the single equivalent discount rate for each company? Note: Do not round intermediate calculations. Round your final answers to the nearest hundredth percent. b. Which of the following companies, A or B, gives a higher discount? Use the single equivalent discount rate to make your choice.