In February, a company wanted to hedge the future purchase of crude oil some time in June or July by using August oil futurescontracts. The August oil futures price was $72.00 per barrel. When the company decided to buy crude oil in July, the oil spot price was$79 and the August oil futures price was $74. Calculate the net cost of purchasing the oil with hedging.O $72O $74O $77O $79O $81

Calculate the net cost of purchasing the oil with hedging again:

Answered: In February, a company wanted to hedge…

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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23. Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible for the speculator based on the information above is: A) $1,562.50. B) -$1,562.50. C) -$1,250.00. D) -$625.00.
Give typing answer with explanation and conclusion
The answers should be found on the following website; cmegroup . Find the recent quotes for soybean futures. What is the longest maturity for this contract? Is there more trading in the nearer or more distant contracts? Does it cost more to buy soybeans for delivery in the next few months or for later delivery? ( give deeply step wise explaination with type the answer.)
A UK oil trader, Teresa, is considering purchasing oil on the spot market for speculative purposes. The current spot price is $18 a barrel. However, she expects the price to decline to $16 a barrel in one month's time. If she bought on the spot market today, she would hold the oil for one month at a cost of £0.002 a barrel for the month, after which she could sell the oil on the spot market. The current US dollar exchange rate is $1.50/£. If she expects the exchange rate to be $1.30/£1 in one month's time, what is her expected gain/loss on the oil deal? A. £0.306 gain per barrel B. £0.027 gain per barrel C. £1.540 loss per barrel D. £6.202 loss per barrel
Sysco corporation has purchased currency call options to hedge a 4,320,000 Swedish krona payable. The premium is $0.015 (per unit of Swedish krona) and the exercise price of the option is $0.097 per Swedish krona. If the spot rate at the time of maturity is S0.105 per Swedish krona, what is the total amount paid by the corporation if it acts rationally (after accounting for the premium paid)? Question 27 options: S 419,040. $354,240. $518,400. S453,600. $483,840.
8. On January 28, 2011 a T-bill was issued with a face value of $170000 and a maturity date of July 22, 2011. If it was purchased for $164862.17 on the date it was issued, what yield is the investor realizing?
An oil producer expects to have 8,000 barrels of oil to sell in 10 months. How can the producer use forward contracts to create a perfect hedge if each forward contract is written on 1,000 oil barrels and matures in 10 months? Assume the forward price for each barrel of oil today for delivery in 10 months is $80, the spot price of a barrel of oil today is $79 dollars and the spot price of a barrel of oil in 10 months is $82 dollars. What net price does the oil producer receive for each barrel of oil in 10 months?
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.
An investor takes a long position in two gold futures contracts. Each gold futures contract is for delivery of 100 ounces of gold. The initial futures price is $1,250 per ounce. The initial margin is $6,000 per contract. The investor closes the contracts when the gold futures price is $1,226.90. If there was one margin call for $4,020, what is the balance in the margin account at the time of closing the futures contracts? a. $11,400 b. $11,800 c. $12,200 d. $12,600 e. $13,000

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