A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells for $1,550 an ounce, but the price isextremely volatile and could fall as low as $1,450 or rise as high as $1,650 in the next month. The company will bring 1,350 ounces ofgold to the market next month.a. What will be the total revenues if the firm remains unhedged for gold prices of (i) $1,450, (ii) $1,550, and (iii) $1,650 an ounce?i.At $1,450 an ouncei.At $1,550 an ounceiii.At $1,650 an ounceb. The futures price of gold for delivery 1 month ahead is $1,570. What will be the firm's total revenues if the firm enters into a 1-monthfutures contract to deliver 1,350 ounces of gold?Total revenuesc. What will be the total revenues if the firm buys a 1-month put option to sell gold for $1,350 an ounce? The put option costs $37 perounce.Total revenues

Hedging is referred to as a strategy that is used to reduce the investment risk by using derivatives…

A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells for $1,550 an ounce, but the price is extremely volatile and could fall as low as $1,450 or rise as high as $1,650 in the next month. The company will bring 1,350 ounces of gold to the market next month. a. What will be the total revenues if the firm remains unhedged for gold prices of (i) $1,450, (ii) $1,550, and (iii) $1,650 an ounce? i. At $1,450 an ounce ii. At $1,550 an ounce i. At $1,650 an ounce b. The futures price of gold for delivery 1 month ahead is $1,570. What will be the firm's total revenues if the firm enters into a 1-month futures contract to deliver 1,350 ounces of gold? Total revenues c. What will be the total revenues if the firm buys a 1-month put option to sell gold for $1,350 an ounce? The put option costs $37 per ounce. Total revenues

A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells for $1,550 an ounce, but the price is extremely volatile and could fall as low as $1,450 or rise as high as $1,650 in the next month. The company will bring 1,350 ounces of gold to the market next month. a. What will be the total revenues if the firm remains unhedged for gold prices of (i) $1,450, (ii) $1,550, and (iii) $1,650 an ounce? i. At $1,450 an ounce ii. At $1,550 an ounce i. At $1,650 an ounce b. The futures price of gold for delivery 1 month ahead is $1,570. What will be the firm's total revenues if the firm enters into a 1-month futures contract to deliver 1,350 ounces of gold? Total revenues c. What will be the total revenues if the firm buys a 1-month put option to sell gold for $1,350 an ounce? The put option costs $37 per ounce. Total revenues

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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When you logged on to your brokerage account this morning, you saw that the Brazil Real is trading at 50.2970. Gold is trading at $200 per ounce. You have $10,000 to invest, and you think you might be able to make arbitrage profits in the gold market. How many Reals could you buy at the posted price? How much gold could you buy at the dollar price in the gold market? What would the gold be worth if the Real price is 750 BRL per ounce? If the Real price for gold is 750 BRL per ounce, how would you make arbitrage profits? How much would you make with your $10,000 investment?
None
Maxwell Mining Company's ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 8% per year. If Do $5 and rs = 17%, what is the value of Maxwell Mining's stock? Round your answer to the nearest cent. $
None
Kale Inc. forecasts the free cash flows (in millions) shown below. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 11.0% and FCF is expected to grow at a rate of 5.0% after Year 2, then what is the firm’s total corporate value (in millions)? Do not round intermediate calculations. Year 1 2 Free Cash flow -$30 $195 a. $3,413 million b. $2,901 million c. $3,044 million d. $2,743 million e. $2,643 million
Amazing Co. is entering into a 3-year remodeling and expansion project. The constructionwill have a limiting effect on earnings during that time, but when it is complete, it shouldallow the company to enjoy much improved growth in earnings and dividends. Last year, thecompany paid a dividend of $3.40. It expects zero growth in the next year. In years 2 and 3,5% growth is expected, and in year 4, 15% growth. In year 5 and thereafter, growth shouldbe a constant 10% per year. What is the maximum price per share that an investor whorequires a return of 14% should pay for Amazing Co.’s ordinary share?
HJK Corporation's demand for cash during a year's time is $500,000. Each time HJK sells securities to raise cash, it pays a brokerage commission of $10. The interest rate HJK earns on the securities is 4% per year 9 How much in securities should HJK sell I each time it sells securities to minimize its costs of holding the cash instead of the securities and to minimize its brokerage commissions? *
Maxwell Mining Company's ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 9% per year. If D0 = $5 and rs = 14%, what is the value of Maxwell Mining's stock? Round your answer to the nearest cent.
A small company owns an oil well. Initially revenues and dividends are expected to grow while the oilwell is being developed. It is then expected to slowly decline as it dries up until it shuts down.An annual dividend of $1.80 has just been paid. Dividends are expected to grow by 15% p.a. until t=6.Dividends are then expected to decline by 1.5% p.a. until t=25 when the well is expected to shut down.a. What is the dividend expected to be in 12 year’s time? b. What is the share price today if the shares are priced at 11.5% p.a.?
Maxwell Mining Company's ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 3% per year. If D0 = $3 and rs = 13%, what is the value of Maxwell Mining's stock? Round your answer to the nearest cent. $ ?

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