Announced plan to increase tariffs on steel imported

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Reference no: EM132010231

You need a barrel of oil in six months. You could either buy the oil today and keep it for a month, wait and buy the oil next month when you need it, you could enter into a futures contract to buy oil at the current futures price $64 per barrel, or you can pay $4 for a call option that gives you the right to buy oil for $60. The current spot price is $61 and the risk free rate is 1%, and carrying costs are $2. If the price ends up being $67 next month, then you should have

a) Waited to buy the oil

b) Entered into a futures contract

c) Bought a call option

d) Buy the oil today and store it for a month.

2. The President recently announced a plan to increase tariffs on steel imported from China. Who is most likely to benefit from these tariffs?

a) Buyers of steel such as carmakers and their customers

b) Producers of substitutes to steel products

c) Buyers of substitutes to steel products

d) Producers of complements to steel products

Reference no: EM132010231

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