The 1-year forward price of copper is $ 1/lb. The 1-year continuously compounded interest rate is 6%. One-year option prices for copper are shown in the table below. Strike Call Put 0.95 0.0649 0.0178 0.975 0.05 0.0265 1 0.0376 0.0376 1.025 0.0274 0.0509 1.034 0.0243 0.0563 1.05 0.0194 0.0665 Suppose CDE mines copper, with fixed costs of $ 0.50/lb and variable cost of $ 0.40/lb. If CDE does nothing to manage copper risk: What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $0.80 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $ If on the other hand CDE sells forward its expected copper production: What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $0.80 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $0.90 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $ What is its profit 1 year from now. per pound of copper, if the copper price in 1 year is $ 1.20 $ ? ? ? ? ? ? ? ? 2 2
The 1-year forward price of copper is $ 1/lb. The 1-year continuously compounded interest rate is 6%. One-year option prices for copper are shown in the table below. Strike Call Put 0.95 0.0649 0.0178 0.975 0.05 0.0265 1 0.0376 0.0376 1.025 0.0274 0.0509 1.034 0.0243 0.0563 1.05 0.0194 0.0665 Suppose CDE mines copper, with fixed costs of $ 0.50/lb and variable cost of $ 0.40/lb. If CDE does nothing to manage copper risk: What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $0.80 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $ If on the other hand CDE sells forward its expected copper production: What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $0.80 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $0.90 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $ What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $ What is its profit 1 year from now. per pound of copper, if the copper price in 1 year is $ 1.20 $ ? ? ? ? ? ? ? ? 2 2
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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Transcribed Image Text:The 1-year forward price of copper is $ 1/lb. The 1-year continuously compounded interest rate is 6%. One-year option prices for copper are shown in the table below.
Strike Call|
Put
0.95 0.0649 0.0178
0.975 0.05 0.0265
1
0.0376 0.0376
1.025 0.02740.0509
1.034 0.02430.0563
1.05 0.0194 0.0665|
Suppose CDE mines copper, with fixed costs of $ 0.50/lb and variable cost of $ 0.40/lb. If CDE does nothing to manage copper risk:
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.80 $
?
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $
?
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $
?
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $
?
If on the other hand CDE sells forward its expected copper production:
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.80 $
?
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 0.90 $
?
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.00 $
?
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.10 $
?
What is its profit 1 year from now, per pound of copper, if the copper price in 1 year is $ 1.20 $
?
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