User Account

All Pages

Calculate the cost of a collar

Assignment Help Finance Basics
Reference no: EM131200679

The current price of gold is $1,600 per troy ounce. There are no storage costs. The risk free rate of interest is 5% continuously compounded.

Please help me with the answers for all the questions.

(a) What is the forward price of gold with delivery in 3 months?

(b) Calculate the cost of a collar, with 3 months to delivery, where the strike of all options used is 1620.126. The annual standard deviation of the gold price is 20%.

(c) Compare the two hedging strategies based on your answer in (a) and (b).

Reference no: EM131200679

Questions Cloud

Infilling material in raft foundation of pumping stations : Why are voids filled with lightweight infilling material in raft foundation of pumping stations?
Net proceeds from the sale of a bond : What are the net proceeds from the sale of a bond? What are flotation costs, and how do they affect a bond's net proceeds? Please answer in 100-150 words.
What were heinzs cumulative earnings over four quarters : What fraction of the cash from operating activities was used for investment over the four quarters?-  What fraction of the cash from operating activities was used for financing activi- ties over the four quarters?
Determine the principal business activity code : Use the following information for JKEB Corporation to complete pages 1 through 3 of the 2011 Form 1120. The final return is due in week five. Use the following link to determine the principal business activity code.
Calculate the cost of a collar : (a) What is the forward price of gold with delivery in 3 months? (b) Calculate the cost of a collar, with 3 months to delivery, where the strike of all options used is 1620.126. The annual standard deviation of the gold price is 20%.
Forecast the amount of funds : Explain how the AFN equation can be used to forecast the amount of funds that will be needed over a several year period.
Financial market practitioner : Explain and illustrate an example when a financial market practitioner (including a security analyst) would use CAPM instead of the other models mentioned above.
What is the operational definition of class standing : Complete the diagram (right) on the right with 5 "shots" on each target. - For each construct think carefully about your operational definition and then determine whether it is a) qualitative or quantitative b) discrete or continuous.
Problem regarding the well-diversified portfolios : You are permitted to choose only one portfolio among the three well-diversified portfolios. Suppose the value of the long position is $35.34 million, your largest arbitrage profits in would be_____million.

Reviews

Write a Review

Finance Basics Questions & Answers

  Ex-dividend price of a share in a perfect capital market

What is the ex-dividend price of a share in a perfect capital market? If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete?

  The role of secularization in the global financial crisis

The Role of Secularization in the Global Financial Crisis of 2007-2010

  What is the current value of chambers common stock

If the dividends are expected to grow by tyhe company's internal growth rate indefinitedly,what is the current value of Chambers common stock if its required rate return is 20%?

  The project costs 1000 and returns a rate of return of 8

your borrowing rate is 10year. your lending rate is 4year. the project costs 1000 and returns a rate of return of 8.

  Financial manager researching investments

Imagine that you are a financial manager researching investments for your client that align with its investment goals. Use the Internet or the Strayer Library to research any U.S. publicly traded company that you may consider as an investment oppo..

  What is the yield on 1-year treasury bills for dell using

what is the yield on 1-year treasury bills for dell? using the historical equity risk premium at about 7 what is the

  Yield to maturity on a comparable u.s. treasury issue

Assume the following bond quotes for IOU Company appear in the financial page of today's newspaper. Suppose the bond has a face value of $1,000 and current date is April 15, 2007.

  Organizational forms requires the strongest management

Which of the following organizational forms requires the strongest management oversight?a. Profit centers

  Value drivers and horizon value of constant growth firm

Value Drivers and Horizon Value of Constant Growth Firm

  Is shoplifting just a cost of doing business

Is shoplifting just a cost of doing business? Do retail stores have an obligation to encourage ethical behavior through store layout and design, and/or by posting signs warning consumers of their intent to prosecute offenders?

  Based on the data contained in table a what is the brek

based on the data contained in table a what is the brek even point in units produced and sold?table aaverage selling

  What changes in interest rates and spot exchange

outline the combination of borrowing, depositing and currency transations on the spot market by which the ontario goverment could devise a synthetic forward contract.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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