User Account

All Pages

Calculate the number of futures contracts

Assignment Help Finance Basics
Reference no: EM131050318

1. On January 10, Volkswagen agrees to import auto parts worth $8 million from the U.S. The parts will be delivered on March 4 and are payable immediately in dollars. VW decides to hedge its dollar position by entering into IMM futures contracts. The spot rate is $1.3437/e and the March futures price is $1.3502.

(a) Calculate the number of futures contracts that VW must buy to offset its dollar exchange risk on the parts contract. (note: The size of one unit futures contract is e125,000)

(b) On March 4, the spot rate turns out to be $1.3462/e, while the March futures price is $1.3473/e. Calculate VW's net euro gain or loss on its futures position. Compare this ?gure with VW's gain or loss on its unhedged position.

2. Suppose a company wishes to lock in a 9-month rate to be placed in 3 months. It has been known LIBOR3 is 7.6% and LIBOR12 is 8.25%. What is the forward forward rate for a LIBOR9 deposit to be placed in three months?

Reference no: EM131050318

Questions Cloud

What amount must you deposit each year : You want to have $65,000 in your savings account 11 years from now, and you’re prepared to make equal annual deposits into the account at the end of each year. If the account pays 6.30 percent interest, what amount must you deposit each year?
Discuss how organisational culture is created : Topic - Organisational culture is a powerful but invisible force. Discuss how organisational culture is created, how it's sustained and is there risk in creating too strong a culture
What was net income for most recent four quarters : You have found the following stock quote for RJW Enterprises, Inc., in the financial pages of today’s newspaper. 52-WEEK YLD VOL NET HI LO STOCK (DIV) % PE 100s CLOSE CHG 72.48 53.42 RJW 1.20 2.0 15 17,777 ?? − .55 What was the closing price for this..
Balance on the pro form a balance sheet : If the actual December 31st A/R balance was $12,000; projected sales in January are $50,000; 70% of sales are on credit; 60% of credit sales are collected in the month of sale and 40% are collected in the month after the sale, what is the projecte..
Calculate the number of futures contracts : Calculate the number of futures contracts that VW must buy to offset its dollar exchange risk on the parts contract. (note: The size of one unit futures contract is e125,000)
Spot price of crude oil-what was the net convenience yield : In January 201x, the spot price of crude oil was $45.65 a barrel and the one year futures price was $56.38 per barrel. The interest rate was about 0.15 percent. What was the net convenience yield? Interpret/explain that result. EXPLAIN IN DETAIL PLEA..
Find the capacitance per unit length of two wires : Find the capacitance per unit length of two wires of radii 1 cm separated by a distance of 1 m.
Futures on the imaginary country stock index traded : In May of 201X, six-month futures on the Imaginary Country stock index traded at 15,330. Spot was 13.743. The interest rate was 19 percent and the dividend yield was 4 percent. Were the futures priced fairly? PLEASE EXPLAIN IN DETAIL
What is the current value of at a discount rate : At the end of year 3, it will pay a final liquidating dividend of $15 a share. After that, the company plans to close its doors permanently. What is the current value of this at a discount rate of 15 percent?

Reviews

Write a Review

Finance Basics Questions & Answers

  Creating an action plan-identifying and setting up support

Many new college students face obstacles throughout their academic careers. Being a successful student requires you to learn or continue to develop many skills, including time management, studying, and an understanding of learning styles and colle..

  Healthcare providers is incorrect

Question 21 Which of the following statements about healthcare providers is incorrect? a. Traditional outpatient settings include clinics, medical practices, hospital outpatient departments, and emergency rooms. b. Long-term care includes both health..

  Last year brenmar sales company has a gross profit margin

last year brenmar sales company has a gross profit margin of 30 and sales of 9million. 75 of the companys sales on

  Calculation of net present value

Calculation of Net Present Value and What is the net present value of a project with the following cash flows and a required return of 12%

  You have a 10 million dollar budget allocated to you by the

you have a 10 million dollar budget allocated to you by the city manager and can get up to 100 matching federal funds

  What is the cost of this newly issued preferred stock

Calculate the cost of preferred stock based on the outstanding issue, given the current market price.

  Calculation of return on stock

BBZ stock is priced at $80 per share and pays a dividend of $1.60 per share. An investor purchases the stock on margin, paying $50 per share and borrowing the remainder from the brokerage firm at 8 percent annualized interest

  What is the expected real intest rate

The two year interest rate is 13.8% and the expected annual inflation rate is 6.9%. What is the expected real intest rate?

  Prepare dated journal entries to record the transactions

Prepare dated journal entries to record the transactions shown above. Assume that Econ did not enter into a forward contract.  Prepare dated journal entries to record the transactions

  Gentlemen gym just paid it annual dividend of 3 per share

gentlemen gym just paid it annual dividend of 3 per share and and it is widely expected that the dividend will increase

  Their yeild to maturity is 9 based on semiannual compunding

you have an outstanding bond for 1000 par value and they matuer in 5 years. their yeild to maturity is 9 based on

  The federal open market committee

The Federal Open Market Committee

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