What is the risk-free price that she can guarantee herself

Assignment Help Financial Management
Reference no: EM13849416

Suppose a farmer is expecting that her crop of oranges will be ready for harvest and sale as 150,000 pounds of orange juice in 3 months time. Suppose each orange juice futures contract is for 15,000 pounds of orange juice, and the current futures price is F0=118.65 cents-per-pound.

 

Assuming that the farmer has enough cash liquidity to fund any margin calls, what is the risk-free price that she can guarantee herself.

Reference no: EM13849416

Questions Cloud

Decision trees and the delphi procedure : STOP!  Have you read, studied, and understood all of the course materials, including the Module Home Page and the sources listed under Background Info?  If you haven't, then do so before attempting this Case.
Identify the activities that push cellphone use : Men send about the same number of emails but spend less time on each. "That may suggest that they're sending shorter, more utilitarian messages than their female counterparts," Roberts said.
Motivation and emotion in psychology : describe the importance of this research for the field of psychology as well as for the improvement of humans in general; 7. One or more "directions for future research" paragraphs
Investment account at the end of every month : Suppose you deposit $40 into an investment account at the end of every month for four years. If the interest rate on the account is 7.32% compounded monthly, how much will be in the account at the end of four years?
What is the risk-free price that she can guarantee herself : Suppose a farmer is expecting that her crop of oranges will be ready for harvest and sale as 150,000 pounds of orange juice in 3 months time. Suppose each orange juice futures contract is for 15,000 pounds of orange juice, and the current futures pri..
Potential research questions for dissertation prospectus : Research questions are critically important in the dissertation process, as they help pinpoint exactly what you intend to discover through your research, you develop two potential research questions for your Dissertation Prospectus
Discuss at least money-capital market instruments : Discuss at least 3 Money Market instruments and 3 Capital Market Instruments. What roles do they play in the flow of money given their differences?
Real estate developer purchased a piece of property : A real estate developer purchased a piece of property at the end of December 2005 for $250,000. The developer sold it at the end of a few years later for $860,000 and was pleased to see that the annual rate of return was 16.7%. When was the property ..
What price will the stock reach equilibrium : A share of stock with a beta of .70 now sells for $60. Investors expect the stock to pay a year-end dividend of $4. The T-bill rate is 5%, and the market risk premium is 8%. At what price will the stock reach an “equilibrium” at which it is perceived..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the future value-compounded semi-annually

What is the future value of $2,600 in 19 years assuming an interest rate of 7.9 percent compounded semi-annually? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

  How much is the effective annual rate

We receive a mortgage loan for 20 years.. The mortgage rate is 6% per annum. Additionally, the monthly payment we ought to make to the bank to amortize the loan is $2, 500. Secondly, compute the remaining amount we still owe the bank, if we pay an ad..

  What is the future value-compounded semiannually

What is the future value of $2,000 in 20 years assuming an interest rate of 7.3 percent compounded semiannually?

  The beginning of the current fiscal year

The capital accounts of Hogan and Moss have balances of $90,000 and $65,000, respectively on January 1, 2011, the beginning of the current fiscal year.  Prepare a statement of partners' equity for 2011 for the partnership of Hogan and Moss. If an amo..

  How the fed should respond to prevailing conditionsconsider

how the fed should respond to prevailing conditions.consider the existing economic conditions including inflation and

  Express total interest as percent of the principal borrowed

Consider a loan for $8000 for a period of 3 years at 7% interest with payments made annually. Build the amortization schedule for this loan. How much total interest is paid on this loan? Express the total interest as a percent of the principal borrow..

  What is the current yield

The 8% bonds of a company are currently selling at $1027. These bonds have 16years left until maturity. What is the current yield?

  What is the cost of gasoline

A large automobile manufacturer has developed a continuous variable transmission (CVT) that provides smooth shifting and enhances fuel efficiency by 3 mpg of gasoline. The extra cost of a CVT is $850 on the sticker price of a new car. For a particula..

  What will these bonds sell for at issuance

Tesla Corporation needs to raise funds to finance a plant expansion, and it has decided to issue 25-year zero coupon bonds to raise the money. The required return on the bonds will be 9 percent. What will these bonds sell for at issuance?

  Determine the optimal number of bran muffins to sell

The American Baker’s Association reports that annual sales of bakery goods last year rose 15 percent, driven by a 50 percent increase in the demand for bran muffins. Most of the increase was attributed to a report that diets rich in bran help prevent..

  Higher plow back ratio means ratio

All else the same, a higher plow back ratio means a(n) _________P/E ratio. You wish to earn a return of 10% on each of two stocks,A and B.Each of the stocks is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividen..

  Assume that the price of the car stays constant

You've been saving up for a new car that you think costs $25,000. You already have $10,000 and you think that, with interest and additional savings, the $10,000 will grow to $20,000 in three years. Suddenly, the phone rings and a voice at the other e..

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd