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The current spot price of grain is $347.75. Assume that the standard deviation of monthly changes in the spot price of grain is 1.1. The standard deviation of monthly changes in grain futures price for the closest contract is 1.6. The correlation between the futures price changes and the spot price changes is 0.8. It is now October 12. Company A is committed to purchasing 300 metric tons of grain a month from now. The firm wants to hedge its risk using the December 2022 wheat futures contracts. Each contract is for the delivery of 50 metric tons of grain.
Company A management is considering using some idle cash to purchase options. They approached a trader and obtained the following information about a call and a put.
4. Calculate the break-even and maximum profit of long positions in the call and put and identify when these strategies (long call; long put) are convenient.
5. If Company A expects an increase in the underlying asset's price, should it invest in a call or a put? What price should be paid for the option based on the Black-Scholes model? Show calculation steps.
What is the firm's target debt-equity ratio?
Compute the volume, mix, and price revenue variances. How did things turn out for the group considering just revenues? How did they turn out from a profit perspective?
Wine and Roses, Inc. offers a 7% coupon bond with semiannual payments and a yield to maturity of 7.73%. The bonds mature in 9 years. What is the market price of a $1,000 face value bond?
A $100 par convertible debenture has a conversion price for common stock of $28 per share. With the common stock selling at $37.
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What was the reason for an all-cash transaction, and what are the advantages and disadvantages of this form
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Banana Box Corporation has sales of $4,137,947; income tax of $323,650; the selling, general and administrative expenses of $284,521; depreciation of $317,778
At the end of the year, the accounts payable balance was: $19,193
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