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1. A six-month long forward contract on 1,000 barrels of Brent Crude Oil is entered into when the commodity price is $57.14 per barrel and the interest rate is 5% per annum with continuous compounding.(a) What is the forward price at the date of entry?(b) Three months later, the price of Brent Crude Oil is $59.63 per barrel (the interest rate is unchanged). What is the present forward price and the present value of the original long forward contract?(c) Suppose one agrees to enter into a six-month forward contract on 1,000 barrels of Brent Crude Oil with the forward price $60,000 when the price of one barrel is $57.14. By way of "mental experiment", create a series of trades to show the arbitrage opportunity this will create.2. Suppose the fixed interest rates in the UK and Euro Zone are 5% and 2% per annum respectively, with continuous compounding. Also, assume that in the Euro market the current Sterling exchange rate is 1.4917 euros (so that 1,000 sterlin pounds costs 1,491.7 euros). What is the fair futures price in the Euro Zone for a contract on 1,000 sterling pounds deliverable in three months? (Assume that a futures contract is the same as a forward.)
3. The risk-free fixed rate of interest is 6% per annum with continuous compounding,and the dividend yield on a share of an XYZ company is 3.5% per annum with continuous compounding (i.e. the asset pays continuously compounded interest on its instant price). The current value of the share is $200. What is the six-month forward price for one share of this type?
Why are bonds preferable to the traditional bank loan from viewpoint of dilution, amount to be borrowed, and threat of bankruptcy?
Calculate Patrick's WACC using market value weights. Round your answer to two decimal places.
A stock has a beta of 1.05, the expected return on the market is 10% and the risk-free rate is 3.8%. Calculate the expected return on the stock
interest rate swaps with no rate adjustments.dell inc. wants to borrow pounds and virgin airlines wants to borrow
D. Butler Inc. needs to raise $14 million. Assuming that the market price of the firm's stock is $95, and flotation costs are 10 percent of the market price, how many shares would have to be issued? What is the dollar size of the issue?
time value of money problemsnbspnbspquestion 1. joe a carlson school graduate you recently hired needs 55000 in 4 years
What amount will you have to deposit today to fund this deferred annuity? Use an 8% discount rate and round your answer to the nearest RM100.
Adventure Airline has revenue of $140 million, fixed expenses of $100 million, and variable expenses of $38 million, which increases in proportion to revenue.
They have $100,000 in notes payable due in July that must be repaid, or an extension renegotiated. Will they be able to pay off the notes?
Assume monthly compounding, what is the highest rate you can afford on a 60-month APR loan?
What role do transaction costs play in bond transactions?
An investor purchases a mutual fund share for $100. the fund pays dividends of $3, distributes a capital gain of $4, and charges a fee of $2 when the mutual fund is sold one year later for $105. What is the rate of return from this investment?
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