A trader enters into a short forward contract

Assignment Help Financial Management
Reference no: EM13976629

A trader enters into a short forward contract on 200 million yen. The forward exchange rate is $0.0090 per yen. How much does the trader gain or lose if the exchange rate at the end of the contract is (a) $0.0084 per yen; (b) $0.0101 per yen?

Reference no: EM13976629

Questions Cloud

What are the rates with continuous compounding : The 6-month, 12-month. 18-month, and 24-month zero rates are 4%, 4.5%, 4.75%, and 5% with semiannual compounding. What are the rates with continuous compounding? What is the forward rate for the six-month period beginning in 18 months?
What is the bond yield to maturity : What is the bond's yield to maturity? Round your answer to two decimal places. What is the bond's current yield? Round your answer to two decimal places.
What is the expected return on the investment with a beta : The expected return on the S&P 500 is 10% and the risk-free rate is 3%. What is the expected return on the investment with a beta of (a) 0.2, (b) 0.5, and (c) 1.4?
Growth of the pharmaceutical industry : By the year 2019,americans are expected to spend more than $13,000 per year in healthcare costs - even after the 2010 passing of the affordable care act (weitz p182).in this essay, assess the role of two factors, the growth of the pharmaceutical i..
A trader enters into a short forward contract : A trader enters into a short forward contract on 200 million yen. The forward exchange rate is $0.0090 per yen. How much does the trader gain or lose if the exchange rate at the end of the contract is (a) $0.0084 per yen; (b) $0.0101 per yen?
Taxed if company is hedger and speculator : Suppose that on October 24, 2013, a company sells one April 2014 live-cattle futures contract. It closes out its position on January 21, 2014. The futures price (per pound) is 91.20 cents when it enters into the contract, 88.30 cents when it closes o..
Is csr primarily on profits rather than ethics : Is CSR primarily on profits rather than ethics?
What strategy should the beef producer follow : The standard deviation of monthly changes in the spot price of live cattle is (in cents per pound) 1.5. The standard deviation of monthly changes in the futures price of live cattle for the closest contract is 1.2. What strategy should the beef produ..
What are main effects perceived by the economic integration : What are the main effects perceived by the economic integration between China and Africa and why? Distinguish between the "static/allocation effects" and the "dynamic/accumulation effects".

Reviews

Write a Review

Financial Management Questions & Answers

  Exchange acts as the counterparty for all transactions

Futures contracts have less default risk because the exchange acts as the counterparty for all transactions. Forward contracts trade on an organized exchange and are marked to market daily. Companies should always try to reduce risk whenever they can..

  Incremental cash flows

Discuss qualitatively how you might have incorporated the likely growth of digital photography in the sales projections developed above?  (Remember hindsight is 20-20.)

  Stock is expected to pay a year-end dividend

A stock is expected to pay a year-end dividend of $2.00, i.e., D1 = $2.00. The dividend is expected to decline at a rate of 5% a year forever (g =-5%). The constant growth model cannot be used because the growth rate is negative. The company's expect..

  The covariance of the returns between willow stock

The covariance of the returns between willow stock and sky diamond stock is 0.0900. The variance of willow is 0.2350, and the variance of sky diamond is 0.1180. What is the correlation coefficient between the returns of the two stocks?

  Evaluate economics of biological emission control system

Evaluate the economics of a biological emission control system and compare it to the thermal/incineration system. For the biological based treatment system, the capital cost is $100,000 with routine maintenance costing $15,000 per year for the first ..

  To increase the market share of your business

You are an agent who wishes to sell a $1 million life insurance policy. Your client thinks she can’t afford a policy that large, so to reduce the price you tell her you will give her 50 percent of your commission. Is this legal or ethical? To increas..

  According to the constant dividend growth model

A share of stock will pay a dividend of $1.1 one year from now, with dividend growth of 4.4 percent thereafter. According to the constant dividend growth model, if the required return is 14.7 percent, what should the value of the stock be 2 years fro..

  Dedicated to circuit board design and fabrication

Nordique Fab is an Arizona company dedicated to circuit board design and fabrication. It has acquired new stations and software for its three facilities at a cost of $450,000 per site. The estimated MV for each system the fourth year is expected to b..

  As seen on an income statement

As seen on an income statement:

  How do risk-return and the cost of capital impact him

For the average business leader who is not in a finance role, how do risk, return, and the cost of capital impact him or her? How can you synthesize this into the workplace?

  Process the ore from planned mining operation

You are considering constructing a new plant in a remote wilderness area to process the ore from a planned mining operation. You anticipate that the plant will take a year to build and cost $99 million upfront. Using a cost of capital of 12%, what is..

  What is its inventory conversion period

Thornton Universal Sales' monthly cost of goods sold (COGS) is $2,000,000, and it keeps inventory equal to 30% of its monthly COGS on hand at all times. Using a 365-day year, what is its inventory conversion period?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd