August futures contract matures

Assignment Help Accounting Basics
Reference no: EM13973479

Suppose a farmer has all his wealth in wheat and owns 1,000,000 bushels of it. Assume further that the cash price is $5 per bushel today and the risk free interest rate is 5%.

a) If the wheat price drops to $3 per bushel tomorrow, what will be his wealth?

b) Suppose the August futures contract matures in exactly 3 months from today, what should be the futures price today and tomorrow?

c) If he wants to lock in a sell-price today, should he be long or short? If the contract is 5000, how many contracts? What will be his wealth tomorrow?

Reference no: EM13973479

Questions Cloud

Theories of behavioural finance : i. Discuss three theories of behavioural finance that may influence investment in Ponzi ii. Discuss three reasons why Ponzi Schemes maybe operated by and among the educated?
Describe how each theoretical perspective views education : Briefly describe how each theoretical perspective views education. Which perspective do you believe best explains education and why
What about sias system for measuring service quality : Should the company change its advertising campaign? Why or why not - what about SIA's system for measuring service quality?
How to use developmentally appropriate practice : The past nine weeks have shown us how to use developmentally appropriate practice when engaging with students. You now know that students learn best through play. You also know that it is best to implement a combination of teacher directed and chi..
August futures contract matures : a) If the wheat price drops to $3 per bushel tomorrow, what will be his wealth? b) Suppose the August futures contract matures in exactly 3 months from today, what should be the futures price today and tomorrow?
Role of the leader in the change initiative : Write a comparison essay that discusses how each model addresses the issues Role of the leader in the change initiative and overcoming resistance to change.
What impact has broken-windows theory had on policing : What impact has broken-windows theory had on policing? What about the future? How would you use the Compstat process if you were a high-level police manager?
Why is it important for a child to develop creativity : This explores a child's creative development and what it means to have a child centered curriculum focusing on the whole child. Please be prepared to discuss the following: Why is it important for a child to develop creativity and What are some way..
Future value of windfall : a) What is the present value of your windfall? b) What is the future value of your windfall in 3 years (on the date of the last payment)?

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Ligon enterprises has prepared a production budget

Ligon Enterprises has prepared a production budget for October. Management has determined that the total required production for October is 800,000 units when an ending inventory of 10,000 units is desired and the beginning inventory is 6,000 unit..

  Percy motors has a target capital structure of 40 debt and

percy motors has a target capital structure of 40 debt and 60 common equity with no preferred stock. the yield to

  Twenty additional kayakers pay 3200 160 each in addition to

twenty additional kayakers pay 3200 160 each in addition to the 5500 that was paid in advance on july 30 on the day of

  How many pages do the financial statements occupy what is

how many pages do the financial statements occupy what is the balance date of the financial statements and in what

  The following information pertains to mgm

The following information pertains to MGM Corp. at January 1, 2013:Common stock, $10 par, 20,000 shares authorized,

  Hess computer store has credit sales of 450000 in 2013 and

hess computer store has credit sales of 450000 in 2013 and a debit balance of 600 in the allowance for doubtful

  Which is their par value

On February 1, 2013, Garzon purchased 6% bonds issued by PBS Utilities at a cost of $ 40,000, which is their par value.

  How many bookcases should be produced each week

Each coffeetable produced by Robert West Designers nets the firm a profit of$15. How many bookcases should be produced each week?

  Determine the ending balance of each t account

Use the letters beside each transaction to identify entries. After recording the transactions, post them to Taccounts, which serves as the general ledger for this assignment..

  Lancastor company manufactures two types of hair

lancastor company manufactures two types of hair conditioners creemy and shiney out of a joint production process. the

  Conduct a survey of your fellow colleagues to gauge

Question 1: You have been asked to conduct a survey of your fellow colleagues to gauge their use of social media at the work place. Explain the following:

  Compute the breakeven point in sales units.

Techno Designs produces head covers for golf clubs. The company expects to generate a profit next year. It anticipates fixed manufacturing costs of $126,500 and fixed general and administrative expenses of $82,030 for the year. Variable manu..

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