Construct a delivery date profit or loss graph for a long

Reference no: EM13393807

1.Construct a delivery date profit or loss graph for a long position in a forward contract with a delivery price of $70. Analyze the profit or loss for values of the underlying asset ranging from $40 to $95?

2.Construct a delivery date profit or loss graph for a short position in a forward contract with a delivery price of $60. Analyze the profit or loss for values of the underlying asset ranging from $50 to $100?

3.The SCC operates a crude oil refinery. Plant's current operating capacity is 1 million barrels. Crude is converted into products at the cost of $15 per barrel of crude.. It can sell the products at $185 per barrel of crude used. It is advised by the banker to enter into a one-year forward contract at $135 per barrel.

a. Find the unhedged profit annually if the crude price may vary from $115 to $155 per barrel.
b. Find the fixed cost and profit if the forward contract is entered into.

Reference no: EM13393807

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