Reference no: EM13844367
The SOYKING Corporation processes soybeans into soyoil and soymeal. Each bushel ofsoybeans (60 lbs/bushel) is converted into 11 lbs of soyoil, 47 lbs of soymeal and 2 lbs ofwater. The company buys soybeans every month and sells the production of soyoil andsoymeal over the following 2 months in a continuous cycle (water is not sold). If theproduction in not sold in the next month, it is stored in the company's storage facility.
It is September 7th and the company is figuring out its hedged buying and sellingstrategy for the November production month. Assume that the company will buy (takedelivery) of the soybeans at the November futures price. It then has to decide whetherthe production of soyoil and soymeal should be sold in December or January.
Due to storage & transportation constraints, the company sells both in the same month. Basedon the company's processing capacity and demand from clients, the company has decidedto process 15 million bushels of soybeans in November. Answer the questions belowusing the contract and price information below. Round off the number of contractscalculated in your answer.
Each soybean contract calls for the delivery of 5,000 bushels (bu). The size of thesoyoil contract is 60,000 lbs and the same for the soymeal contract is 100 tons (2000 lbsper ton).
The futures prices are as follows:Delivery Month SOYBEANS SOYOIL SOYMEAL(cents/bushel) (cents/lb) ($/ton)November 905 December 37.9 256.0 January 920 38.5 254.4
a) Calculate the revenue from selling the production in December?
b) What is the profit-maximizing futures trading strategy for SOYKING. When shouldthe production from November be sold?
c) What is the gain in profit in b) over the second-best option?
2) Suppose the 6 month futures price for the Swiss franc is $0.6600 ($/franc). The currentspot price is $0.6450.
a) If the futures and spot prices are fairly priced (no arbitrage), then what is the USSwissinterest rate difference over the next 6 months?
b) If the US and Swiss interest rates change to 2% and 2.5%, can you make risklessmoney? If so, how much per contract (contract size is 125,000 franc).
c) Define the mechanics of the complete strategy for b) above.
|
Determine the theoretical and conceptual framework
: With this information in mind, as well as any additional research that will help inform your selection, determine the theoretical and/or conceptual framework that you intend to use. You are advised to give serious thought to this task. This theory..
|
|
Research on the internet on smart optical sensors
: Do some research on the internet on smart optical sensors or on optical sensors for smart or mobile applications. Pick one smart optical sensor or one smart or mobile application of optical sensors, and explain how it works. Make sure your choice is ..
|
|
How is national debt affected by business cycles
: 1. Define business cycles. How is national debt affected by business cycles?
|
|
Business unit analysis
: Directions: Create a Feasibility Study for Harley-Davidson using the following outline:
|
|
What is the profit-maximizing futures trading strategy
: What is the profit-maximizing futures trading strategy for SOYKING. When shouldthe production from November be sold? What is the gain in profit in b) over the second-best option?
|
|
Description of two quantitative data sources
: Brief description of two quantitative data sources you might use to develop your community health profile for your community health assessment. Explain why these data sources are relevant. Finally, describe two challenges you might face in collect..
|
|
Throw balloons filled withwater
: You and your friend throw balloons filled withwater from the roof of a several story apartmenthouse. You simply drop a balloon fromrest. A second balloon is thrown downwardby your friend 3.7 s later with an initial speedof 72.52 m/s. They hit the gro..
|
|
Light sources coincide at several locations
: In a double-slit experiment, two coherent wavelengths of light, 425 nm and 510 nm, illuminate the slits of separation is 1.75 mm and a screen located 5 m away from the double-slit system, the bright fringes of diffraction patterns from both light sou..
|
|
Find the profit-maximizing quantity and price
: Problem: Consider a monopolist who has a constant marginal cost of MC = 20. Find the profit-maximizing quantity and price if the inverse demand curve is P = 620 - 25Q.
|