Calculate the price of a forward contract, Microeconomics

Assignment Help:

Commodities

A)

It is well documented that commodity prices are very volatile when compared to other asset classes.  Discuss factors that cause volatility in the commodity markets.

5B)

For the following questions assume the risk free rate of return is 2.50%

Your company imports large quantities of oil.  On January 1st 2011 the spot price of oil is $70.  You are concerned that recent events will drive the price of oil higher in 90 days time when you will need to purchase a large quantity. Under these circumstances calculate the price of a forward contract. In 90 days time the spot price of oil is $125; calculate the profit or loss of your forward position.

What is the 10 month forward price of a dividend security based on the following information:

Current price

$110.00

Quarterly dividend

$1.00

Dividend payment dates:

3M, 6M, 9M


Related Discussions:- Calculate the price of a forward contract

Explain hard currency, International economic relations also vary, in large...

International economic relations also vary, in large measure, on monetary issues.  You are unlikely to accept the Turkish Lire in payment for your wages in this country, easily bec

Microeconomics, An economy has only one member Robinson Crusoe. Robinson al...

An economy has only one member Robinson Crusoe. Robinson allocates his time between fishing and collecting fruits. One hour spent finishing yields 4 fish. One hour spent collecting

Rent, what do you meant by rent?

what do you meant by rent?

Statistics, please can you explainn what "down 0.1 percentage point on the ...

please can you explainn what "down 0.1 percentage point on the quarter means"?

Monopsony is one buyer of a commodity, Monopsony is single buyer of a commo...

Monopsony is single buyer of a commodity in the market.  The MRP slopes downward in an imperfectly competitive (resource) market serving an not perfectly competitive product mar

Firms and industry, explain the main criteria for classifying firms into in...

explain the main criteria for classifying firms into industries.which criteria serve the better and why?

Explain the industrial revolution, The Industrial Revolution The centur...

The Industrial Revolution The century after 1750, saw the industrial revolution proper: invention of steam engine, spinning jenny, power loom, hydraulic press, railroad locomot

Indifference curve, explain the properties of indifference curve with the h...

explain the properties of indifference curve with the help of diagrams?

Write Your Message!

Captcha
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