User Account

All Pages

Calculate the cost of a collar

Assignment Help Finance Basics
Reference no: EM131201878

The current price of gold is $1,600 per troy ounce. There are no storage costs. The risk free rate of interest is 5% continuously compounded.

Please help me with the answers for all the questions.

(a) What is the forward price of gold with delivery in 3 months?

(b) Calculate the cost of a collar, with 3 months to delivery, where the strike of all options used is 1620.126. The annual standard deviation of the gold price is 20%.

(c) Compare the two hedging strategies based on your answer in (a) and (b).

Reference no: EM131201878

Questions Cloud

Calculate and suggest possible reasons for the materials : Calculate and suggest possible reasons for the materials price variance from the following data:- Standard price per kilo is £4, Standard usage per unit is 5 metres,  Actual price per kilo is £3, Actual usage per unit is 5 metres.
Styrene is made by dehydrogenation of ethyl benzene : Note: Structures for the compounds in Problems 2.3, 2.8, and 2.9 can be found in the Merck Index, but are not required to solve the problems.
What specific factors may be involved in both physical roots : Anorexia nervosa has both environmental and physical causes. Identify and discuss these two causes and what specific factors may be involved in both the physical and environmental roots of anorexia. Next, discuss how these two types of causes can ..
Calculate and suggest possible reasons for the materials : Calculate and suggest possible reasons for the materials usage variance from the following data:- Standard price per tonne is £50, Standard usage is 1.000 tonnes, Actual price per tonne is £50, Actual usage is 995 tonnes.
Calculate the cost of a collar : (a) What is the forward price of gold with delivery in 3 months? (b) Calculate the cost of a collar, with 3 months to delivery, where the strike of all options used is 1620.126. The annual standard deviation of the gold price is 20%.
What specific knowledge skills and abilities did you acquire : What specific knowledge, skills and abilities did you acquire from the courses in your concentration? Were there any knowledge, skills and abilities you expected to acquire but did not?
Explain the concept of cost of capital : Explain the concept of cost of capital. How may cost of capital affect long-term financial decisions? Would a company prefer to have a high or low cost of capital? Why? What was the effect of cost of capital on long-term financial decisions for yo..
What type of separation operation would you use : If it involves a mass-separating agent, propose one.
Calculate kg for the wetted-wall column : The value for the diffusivity of water vapor in air is 0.22 cm2/s at 0°C and 1 atm. The mass velocity of air is taken relative to the pipe wall.

Reviews

Write a Review

 

Finance Basics Questions & Answers

  What differentiates the portfolios of a money market

what differentiates the portfolios of a money market mutual fund a commercial bank a savings and loan association and a

  What rate of return did mike earn over the year

The stock is currently selling for $60 per share. What rate of return did Mike earn over the year

  What is the expected return on an asset

What is the expected return on an asset

  Why is the debt of the federal government considered to be

since fixed-income securities such nbspcorporate bonds nbsphave varying patterns of cash flows and expiration dates

  Prepare a written memorandum outlining each of changes

Prepare a written memorandum outlining each of your proposed changes and the specific impact of each on the Return on Assets.

  What was net capital spending for 2009

The company's 2009 income statement showed a depreciation expense of $805,000. What was net capital spending for 2009?

  Research entrepreneurism and small businesses

Using Bloomberg Businessweek B-School Connection resources, research entrepreneurism and small businesses, and create an executive business plan presentation of 15-20 slides that includes the following:

  Organizational input requirements

Demonstrate the best possible steps for a project manager to take in order to price out a job in which the specifications are not prepared until the job is half over. Provide a rationale for your response.

  Describing currency derivatives

Mention the factors which affect currency call option premiums and briefly describe the relationship that exists for each. Do you think an at-the-money call option in euros has a higher or lower premium than an at-the-money call option in British ..

  Explain what were some of the credit risks that arose

What were some of the credit risks that arose from the 2008 financial crisis. How were banks affected by the credit risks. How were individuals and businesses affected by the credit risks

  Estimate the fraction of the popular vote

How many voters must be included in a sample collected to estimate the fraction of the popular vote favorable to a presidential candidate in a national election if the estimate must be correct to within .005?

  Assignment on the cost of capital

To expand operations, firms often require more funds than can be generated from operations. These additional funds require a long-term source of capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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