User Account

All Pages

What is the optimal number of futures contracts

Assignment Help Finance Basics
Reference no: EM133056359

An airline will purchase 2 million gallons of jet fuel in one month and hedges using heating oil futures. From historical data, the standard deviation of heating oil futures contract is sF =0.031 dollar and the standard deviation of jet fuel is sS =0.026 dollar; the correlation coefficient between the two is = 0.9272. The size of one heating oil contract is 42,000 gallons. The spot price is 1.94 and the futures price is 1.99 (both dollars per gallon).

What is the optimal number of futures contracts for hedging after tailing (i.e. assuming daily settlement of futures)?

Reference no: EM133056359

Questions Cloud

After how many years will initial investment have doubled : Maria has a $5,000 investment with an annual compound interest rate of 15.6%. After how many years will the initial investment have doubled in value
Compute omega discounted payback period : The payback method helps firms establish and identify a maximum acceptable payback period that helps in capital budgeting decisions. There are two versions of t
Prepare journal entries relating to the stock option plan : Prepare journal entries relating to stock option plan for the years 2021, 2022, and 2023. Assume that the employee performs services equally in 2022 and 2023
Identify the genre and the target student population : Develop an annotated bibliography of at least 15 pieces of literature that meet the purpose of this assignment
What is the optimal number of futures contracts : What is the optimal number of futures contracts for hedging after tailing (i.e. assuming daily settlement of futures)?
Calculate monthly payments : A fully amortizing mortgage loan is made for $82,000 at 6 percent interest for 25 years. Payments are to be made monthly.
What amount will be reported as cost of goods sold : Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 28 units that were sold
How much will the lender actually disburse : John wants to "roll in" or finance the loan fee of $3,800 into the loan amount which would make the loan $90,800 and the interest rate is 6%.
Religious rejection of globalization : The religious rejection of globalization: How do these arguments also appear to be about the place, role, or status of Christianity in a globalizing, secular

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