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1. A six-month long forward contract on 1,000 barrels of Brent Crude Oil is entered into when the commodity price is $57.14 per barrel and the interest rate is 5% per annum with continuous compounding.(a) What is the forward price at the date of entry?(b) Three months later, the price of Brent Crude Oil is $59.63 per barrel (the interest rate is unchanged). What is the present forward price and the present value of the original long forward contract?(c) Suppose one agrees to enter into a six-month forward contract on 1,000 barrels of Brent Crude Oil with the forward price $60,000 when the price of one barrel is $57.14. By way of "mental experiment", create a series of trades to show the arbitrage opportunity this will create.2. Suppose the fixed interest rates in the UK and Euro Zone are 5% and 2% per annum respectively, with continuous compounding. Also, assume that in the Euro market the current Sterling exchange rate is 1.4917 euros (so that 1,000 sterlin pounds costs 1,491.7 euros). What is the fair futures price in the Euro Zone for a contract on 1,000 sterling pounds deliverable in three months? (Assume that a futures contract is the same as a forward.)
3. The risk-free fixed rate of interest is 6% per annum with continuous compounding,and the dividend yield on a share of an XYZ company is 3.5% per annum with continuous compounding (i.e. the asset pays continuously compounded interest on its instant price). The current value of the share is $200. What is the six-month forward price for one share of this type?
Is there a particular name brokerage firms and investors use to designate the technique, and if so what is it?
The balance sheet shows $10,000 in the common stock account and $60,000 in the capital in excess of par account and $94,300 in the retained earnings account. The firm just announced a 100% stock dividend. What will be the value of the common stock..
what kind of business law system would you adopt -a civil law system or a common law system, and why? 2) What kind of business regulations would you impose?
Your family recently obtained a 30 months 100,000 fixed rate mortgage. Determine which of the following statements is most correct and why?
The offer price of an open end fund is $17.90 and the fund is sold with a front end load of 4.5%? What is the fund's NAV?
If the account pays 14% per annum, how much each year will you receive from the perpetuity (round to nearest $1 000)?
Write a review of the attached article, "Clearing, Counterparty Risk, and Aggregate Risk." Explain the key points that the author was trying to communicate. The review should be at least two pages.
A Europeand Vanilla Put option on the underliner with stike price of $9 is trading in the market. What is the no-arbitrage value of the European vanilla Put option?
what are the firm's current capital structure weights for equity and debt respectively?
How much money should go into each type of investment to maximize the interest while meeting the constraints? What is the maximum interest she can earn?
If the required return on the stock is 8 percent, what is the current share price?
EEM, Corporation has the following balance sheet, It has determined the following relationships between sales and the various assets and liabilities that vary with the level of sales.
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