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

What do you meant by hoarding, Q. What do you meant by Hoarding? A situ...

Q. What do you meant by Hoarding? A situation in that companies, financial investorsor individual consumers choose to hold hoards of cash or other liquid assets, instead of spe

Comparison with our targets - structure of national income, Comparison wit...

Comparison with Our Targets : A proper objective assessment of our performance can be carried out only when we juxtapose our current achievements with: (i) planned or targeted

Explicit costs are accounting costs, An economist's view of costs contains ...

An economist's view of costs contains both explicit and implicit costs.  Explicit costs are accounting costs, and implicit costs are the opportunity costs of an allocation of resou

Perfect competition, demand: Qd=100=Px supply: MC=10+1/2Qs assume first th...

demand: Qd=100=Px supply: MC=10+1/2Qs assume first that this firm operates in a perfectly competitive market. find the price and quanity in this market.

Monopsony, What are the advantages and disadvantages of monopsony?

What are the advantages and disadvantages of monopsony?

Good governance to ensure implementation of economic policy, GOOD GOVERNAN...

GOOD GOVERNANCE TO ENSURE IMPLEMENTATION OF ECONOMIC POLICY:  Government is very sensitive to the expectation of the people and sincere efforts in this direction have already

Illustrate the content in the rational consumer, Illustrate the content in ...

Illustrate the content in the rational consumer? Content in the rational consumer: a. How to spend income onto goods and services? b. Why maximizing usefulness? c. Wh

What are the possibilities of returns to scale in production, What are the ...

What are the possibilities of returns to scale in production technology? Three possibilities are there as: technology exhibits (a) constant returns to scale; (b) decreasing ret

Incidence tax, If the inverse demand curve is p=120-Q and the marginal cost...

If the inverse demand curve is p=120-Q and the marginal cost is constant at 10, how does charging the monopoly a specific tax of r=10 per unit affect the monopoly optimum and the w

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