Q: Maintenance money for an athletic complex has been sought. Mr. Kendall, the Athletic Director,…
A:
Q: Divided Walls Construction (DWC) has determined the yield to maturity (YTM) on new bonds is 5…
A: We have the cost and proportion of different sources of capital in the capital structure. We have to…
Q: please provide ball plus solution function
A: An annuity is an agreement that pays a fixed periodic amount for a predetermined time. It is largely…
Q: 3. You are planning to build a small Savonius wind power system that will provide 8600 kWh of…
A: Given: Installation cost of system = $1.62/W = $1.62*1000/kW Capacity factor, CF = 18% = 0.18 Life,…
Q: Jim Bildery's factory is considering three approaches for meeting an expected increase in demand.…
A: In finance we are often faced with a situation in which we are faced with different states of nature…
Q: Calculate earnings per share information as it should appear in the financial statements of Flounder…
A: Working Note #1 Calculation of weighted average common shares outstanding: Weighted average common…
Q: If a firm has an EV of $1,270 million and EBITDA of $388 million, what is its EV ratio? (Round your…
A: Enterprise Value(EV) Analysts frequently utilize enterprise value/financial metrics to swiftly…
Q: Suppose you are offered an investment that will allow you to double your money in 8 years. You have…
A: Note: Hi! Thank you for the question, As per the Honor code, we are allowed to answer one question…
Q: If I invested an amount of money compounded monthly for 10 years with a discount rate 8.53 %. What…
A: Effective interest rate is interest rate after considering the impact of compounding on the interest…
Q: what does it mean when there is a outlier jump In time value as intrinsic value of the a call option…
A: Intrinsic value of call option With stock price (S) and exercise/ strike price (X), the intrinsic…
Q: Moxabl Inc. plans to buy land and build an assembly line for its expansion. The anticipated total st…
A: Land and Structures cost $ 6,50,000.00 Monthly Saving $…
Q: on e of
A: If the Financial Institution invested 400mn$ in T bonds then the market value of firm will be…
Q: Why is it important for persons who work in other areas in a business to have an understanding of…
A: Finance is life blood of an Organisation.Your decisions will affect the financial well-being of your…
Q: Compare and contrast the features of popular personal financial planning software
A: Personal finance: Personal finance is the management of your money, including investing and saving.…
Q: a company will be paying off a loan witj annual payments of $6000 for 8 years assuming 5% annual…
A:
Q: what are the 5 categories of ratios and which would be most important to you if you were an inv
A: For the investors financial ratios are very important and they help in decision making to the…
Q: A market value weighted index has three stocks in it, priced at 82,8, 76.2, and 56.9 per share, and…
A: The market value-weighted index is one of the most common indexes used in the market. The weight of…
Q: 1. A portfolio of 2 mutual funds, one investing in stocks and the other in bonds: ● ● Stock fund:…
A: As per the given information: Expected returnAllocationVarCovStock fund12%.5030090%Bond fund8%.50200…
Q: What is MOST TRUE of DEFAULT RISK on a mortgage loan? Group of answer choices It is always lower…
A: Mortgage loans are secured loan i.e., borrower raise funds for various purposes by promising…
Q: Leila Ahmadi wants to purchase a package of shredded cheese at a local store for taco night. Is it…
A: The customer purchasing the goods from a store may have various options, however, the customer makes…
Q: Your lease calls for payments of $500 at the end of each month for the next 12 months. Now your…
A: Simple interest is the interest that is charged on a principal amount and the amount of interest…
Q: Free Inc. has after tax operating income of $100 million. It is depreciation is $20million. The…
A: After ta Operating income of $100million Depriciation is $20million Capital expenditure is…
Q: Miss Universe contestant who won a reward of 500,000$ invested it in the bank for 5 years at 10%…
A:
Q: Lee Holmes deposited $15,400 in a new savings account at 9% interest compounded semiannually. At the…
A: Compounding is a concept of earning interest on interest. The compounding means the interest is…
Q: Q7: Oil wells in the United States can operate and produce for an average of 20-40 years. Investing…
A: To determine whether we should invest in this oil rig or not we will use capital budgeting theory in…
Q: ROT Ltd. is considering whether it should buy or lease equipment that costs 1.60 crores and has a…
A: Present value of annuity due Annuity due is a series of equal payments at equal interval over a…
Q: News Corp is expected to pay a dividend of $0.8 in one year. The dividend is expected to grow at 12%…
A: The value of stock can be found as the present value of dividend and the present value of terminal…
Q: ) The forecasted demand for the week of October 12 using a 3-week moving average = ____ pints…
A: the final answer is 373.67 approx Approach used for the solution;- Under three period moving…
Q: Problem no 20 (Ref. 3) You have just completed your post-graduation in Finance from Tribhuvan…
A: Hi, since you have psoted a question with multiple sub-parts, we will answer the first three, as per…
Q: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.325%.…
A: Given, Number of bonds bought is 10 Coupon rate 9.325% Purchase price 89.875
Q: You are wishing to accumulate $8,000 for an expedition in 5 years’ time. To do this, you will make…
A: The Future Value of Annuity Due refers to the concept which determines the sum total of all the cash…
Q: Tembo holds a one-year put option on Shoprite common stock. The put option can be exercised at K50.…
A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…
Q: A couple just had a baby. How much should they invest now at 5.4% compounded daily in order to have…
A: Compound Interest The interest that can be earned above interest is known as compound interest. The…
Q: A couple want to buy a house that costs $542 000. They pay a 20% deposit and borrow the rest of the…
A: House value = $542,000 Loan amount (P) = House value * (1 - Down payment) Loan amount (P) = $542,000…
Q: Suppose that you can earn 15% compounded monthly. You would like to have $100,000 in 5 years. You…
A: Given:
Q: Consider a student depositing an amount P into a savings account and then made the following…
A: Given, Amount to be withdrawn at the end of 2nd year is $20 at the end of 3rd year is $30 at the end…
Q: 8-9. (Estimating betas) Consider the following stock returns for B&A Trucking, Inc., and the market…
A: We have a plot of the stock return versus the market return. From the plot, we have to estimate the…
Q: James is starting to take his financial future seriously after studying finance at university. He is…
A: Future Value(FV) $ 20,00,000.00 Interest Rate(RATE) 7.25% Time Period(NPER) 30
Q: Assume that PAR is organized as a proprietorship when it starts business. If PAR becomes extremely…
A: Corporation A business that is formed by two or more individuals and has a separate legal identity…
Q: 4. A company just purchased a small field in the Albuquerque field in New Mexico. According to their…
A: A loan and its repayment: A loan availed of may be repaid in several ways. Some of the methods…
Q: Carl is paid an hourly rate of $12.65. What is his annual gross pay if he works 25 hours per week?…
A: Hourly rate = $12.65 Number of hours work each week = 25 Number of weeks in a year = 52 Annual gross…
Q: Nesmith Corporation's outstanding bonds have a $1,000 par value, a 6% semiannual coupon, 17 years to…
A: Maturity value or par value (Z) = $1,000 Semiannual coupon amount (C) = $30 (i.e. $1000 * 0.06 / 2)…
Q: (Liquidity Analysis) The King Carpet Company has $2,960,000 in cash and a total of $11,980,000 in…
A:
Q: A new establishment costing P300,000,000 excluding the equipment has an estimated useful life of 40…
A:
Q: What would be the total fire insurance premium for Best Hardware if their $685,000 building belongs…
A: In the above question we are given: Building=685000 Contents of building=840250 The structural…
Q: Calculate the percentage return on a 1-year Treasury bill with a face value of $10,000if you pay…
A: The treasury bill is issued at discount but matures at the face value. There is no interest on the…
Q: Calculate the effective rate of interest.
A: Information Provided: Rate = 4% Period = 13 weeks Principal = $12,000
Q: A company is evaluating a project with a useful life of 12 years that requires an investment of…
A: Useful Life of project is 12 years Required investment per year in the begining of year 1 to 4 is…
Q: 1-15. Tropical Tours is considering an expansion of its operations, which will require the company…
A: WACC Breakpoints The total financing a company can make from the existing sources of capital before…
Q: th 1. What single payment on the 6 year will settle debts of Php th 10,000due in 4 years, and Php…
A: Amount due in 4 years (P4) = Php10,000 Amount due in 8 years (P4) = Php15,000 Quarterly interest…
Step by step
Solved in 2 steps
- A farm that produces corn is looking to hedge their exposure to price fluctuations in the future. It is now May 15th and they expect their crop to be ready for harvest September 30th. You have gathered the following information: Bushels of corn they expect to produce 44,000 May 15th price per bushel $3.08 Sept 30 futures contract per bushel $3.22 Actual market price Sept 30 $3.37 Required (round to the nearest dollar): Calculate the gain or loss on the futures contract and net proceeds on the sale of the corn. Net gain or loss on future $Answer Sell the corn $Answer Net $AnswerAfter collecting basis data, a canola grower feels that 775 dollars per tonne is a realistic forward cash price for the fall’s crop since November canola futures are trading at 800 dollars per tonne. To hedge, the producer purchases an at-the-money PUT for 20 dollars tonne on May 19th. While the hedge was in place, canola producers in Europe experienced crop failures and consumers in China began to import large quantities of canola produced in Canada. By October 15th, November canola futures had risen to 825 dollars per tonne. However, because of increased local production, the basis in the grower’s region weakened by 5 dollars tonne. On October 15th the grower sold his canola in the cash market. Use T-accounts to answer the following: 1. What is the net selling price from hedging using the PUT?After collecting basis data, a canola grower feels that 775 dollars per tonne is a realistic forward cash price for the fall’s crop since November canola futures are trading at 800 dollars per tonne. To hedge, the producer purchases an at-the-money PUT for 20 dollars tonne on May 19th. While the hedge was in place, canola producers in Europe experienced crop failures and consumers in China began to import large quantities of canola produced in Canada. By October 15th, November canola futures had risen to 825 dollars per tonne. However, because of increased local production, the basis in the grower’s region weakened by 5 dollars tonne. On October 15th the grower sold his canola in the cash market. Use T-accounts to answer the following: a. What is the net selling price from hedging using the PUT? b. What price would the producer have received if he had hedged using futures? Need answer in short!
- It is September 10 and Mr. James is making final estimates of this year’s wheat crop. His production is turningout to be much better than anticipated. This causes concern because if his production is better than expected, otherfarmers must be experiencing the same situation. The current spot price is $2.25 per bushel, and the Octoberwheat futures (5,000 bushels per contract) price is $2.52 per bushel. At the current spot price, Mr James wouldjust break even with his anticipated 60,000 bushels. His wheat will not be ready until October.a) What can Mr James do to ensure his profitability? Is this a long or a short hedge? Why? b) What is the essential feature of a forward contract that makes a futures contract a type of forward contract?With a dry summer forecast, you expect that the soybean harvest will be smaller than normal and that soybean prices will rise. To speculate on this expectation, you buy 10 soybean futures contracts with a September maturity. The soybean futures price when you initiate the long position is $14.00 per bushel. By August the soybean futures price has risen to $16.00 per bushel. You execute an offset trade. What is your cumulative profit on the trades?You are the buyer for a cereal company and you must buy 80,000 bushels of corn next month. The futures contracts on corn are based on 5,000 bushels and are currently quoted at 415′0 cents per bushel for delivery next month. If you want to hedge your cost, you should _____ contracts at a cost of _____ per contract.
- This is a follow up question so I copied/pasted the same question below for your convenience: An investor enters into a long futures position to buy 5,000 bushels of wheat for 575 cents per bushel. The initial margin is $5,000 and the maintenance margin is $2,500. c. Starting from the original position, the investor would have to see a price movement of _____ cents (above/below) ______ 575 cents in order to withdraw $2,000 from the margin account. So Initial Margin = $5,000;Maintenance Margin = $2,500;Withdraw Amount = $2,000;Original Price per Bushel = 575 cents or $5.75;Number of Bushels = 5,0001. How did you come up with the calculation? You wrote that: (new_price * 5000)/(5.75 * 5000) = withdraw amount/mainenance margin 2. Could you please explain the right side (i.e., why the ratio is withdraw amount to mainenance margin)?Assume that the price of December 2021 corn futures is $4.65/bushel in February and $4.50 in October. If spot cash price in October is $4.55, what is the farmer's total revenue? Assume he entered into 20 contracts. Each corn contract is 5000 bushels.Your farm is producing wheat. You worry that the price of wheat is falling every year and decided to do some hedging in the futures market. Unfortunately, the market does not currently have futures on wheat. Instead, you found out that there is a liquid corn futures market and historically wheat and corn price movements are positively correlated. Corn prices are moving approximately 90% of wheat price movements (if the wheat price changes by ±10%, the corn price will change about ±9% (= 10% * 90%). Today’s per bushel wheat price is $5.2 and per bushel corn price is $3.5. Your farm needs to hedge for about 100,000 bushels of wheat for next year. Contract size of corn futures is 100 bushels per contract. Come up with a hedging position including the number of futures contracts for your farm. Cross-Hedging Question
- Your farm is producing wheat. You worry that the price of wheat is falling every year and decided to do some hedging in the futures market. Unfortunately, the market does not currently have futures on wheat. Instead, you found out that there is a liquid corn futures market and historically wheat and corn price movements are positively correlated. Corn prices are moving approximately 90% of wheat price movements (if the wheat price changes by ±10%, the corn price will change about ±9% (= 10% * 90%). Today’s per bushel wheat price is $5.2 and per bushel corn price is $3.5. Your farm needs to hedge for about 100,000 bushels of wheat for next year. Contract size of corn futures is 100 bushels per contract. Come up with a hedging position including the number of futures contracts for your farm.You are a futures trader on Lean Hog at Kantar, New York. You have the following information on Lean Hog. The standard deviation of monthly changes in the spot price of Lean Hog Futures is (in cents per pound) 5. The standard deviation of monthly changes in the futures price of Lean Hog Futures the closest contract is 8. The correlation between the futures price changes and the spot price changes is 0.8. It is now December 17, 2019. Your client, a pork producer, is committed to purchasing 400,000 pounds of lean hog on January 15. The producer wants to use February Lean Hog futures contracts to hedge its risk. Each contract is for the delivery of 40,000 pounds of cattle. a. What is the optimal hedge ratio? (sample answer: 0.45 or 45%) b. Should the pork producer take a long or short hedge? (sample answer: short or long) c. How many contracts of lean hog futures does your client need to take to hedge the risk? (sample answer: 6 contracts)Consider a farmer who plans to sell 6,000 bushels of corns on date T. The date-T spot price of corn is normally distributed with mean $500 per bushel and standard deviation $50 per bushel. To hedge the price risk, the farmer considers shorting corn futures with delivery on date T. The futures price is $480 per bushel, and one contract is to deliver 5,000 bushels. In addition, the farmer can take only integer number of contracts (i.e, a fraction of contract such as 0.1 is NOT allowed). (a) How may contracts does the farmer need to take? (b) What is the mean of the total revenue? (c) What is the standard deviation of the total revenue?