User Account

All Pages

Effective price received by company for commodity

Assignment Help Finance Basics
Reference no: EM133117126

On March 1 the price of a commodity is $1,050 and the December futures price is $1,059. A producer of the commodity entered into a December futures contracts on March 1 to hedge the sale of the commodity on November 20.

On November 20 the spot price is $990 and the December futures price is $994. The firm closed out its futures position on November 20 at $994 and sold the commodity at the spot price. What is the effective price (after taking account of hedging) received by the company for the commodity?

Reference no: EM133117126

Questions Cloud

Information for horizon manufacturing corp : 20 million shares of common stock outstanding. The common stock currently sells for $12 per share and has a beta of 2.5
Prevailing interest rate : 1. Given the information in the table below, which of the following statements is true? Assume the cost of capital is 12%.
What is the futures price per unit : The initial margin is $8,500 and the maintenance margin is $6,500. What is the futures price per unit below which there will be a margin call?
Month exposure to the price of commodity : Suppose that the standard deviation of monthly changes in the price of commodity A is $1. The standard deviation of monthly changes in a futures price for a con
Effective price received by company for commodity : On March 1 the price of a commodity is $1,050 and the December futures price is $1,059. A producer of the commodity entered into a December futures contracts on
Correlation between futures price and commodity price : Suppose that the standard deviation of monthly changes in the price of commodity A is $1. The standard deviation of monthly changes in a futures price for a con
What is the theoretical forward price : A one-year long forward contract on crude oil is entered into when the spot price is $60/bbl. and the risk-free rate of interest is 2.00% per annum with continu
Explain the theoretical fair value of the futures contract : What is the theoretical "fair value" of the futures contract? Please enter your answer as a number rounded to three decimal places.
What is the correct arbitrage strategy : The two-month interest rates in Euros and the U.S. Dollar are 2% and 4% per annum, respectively, with continuous compounding. The spot price of the Euros is $0.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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