User Account

All Pages

Semi-annual compounding

Assignment Help Finance Basics
Reference no: EM13837629

Question 1: The six month and one-year rates are 3% and 4% per annum with semi-annual compounding. Is 3.90% or 3.95% or 3.99% closest to the one-year par yield expressed with semi-annual compounding?

Question 2: A company enters into a short futures contract to sell 50,000 units of a commodity for 70 cents per unit. The initial margin is $4,000 and the maintenance margin is $3,000. Explain what is the futures price per unit above which there will be a margin call?

Question 3: The spot price of an investment asset is $30 and the risk-free rate for all maturities is 10% with continuous compounding. The asset provides an income of $2 at the end of the first year and at the end of the second year. What is the three-year forward price? (2 mark)

Question 4: On March 1 a commodity's spot price is $60 and its August futures price is $59. On July 1 the spot price is $64 and the August futures price is $63.50. A company entered into futures contracts on March 1 to hedge its purchase of the commodity on July 1. It closed out its position on July 1. What is the effective price (after taking account of hedging) paid by the company?

Reference no: EM13837629

Questions Cloud

Marketing plan that examines limitations : The part of the marketing plan that examines limitations that a company might face in marketing strategy development or implementation is the
Discuss the ethical implications of a leader''s role : Discuss the ethical implications of a leader's role in the socialization of new hires into the preexisting culture of an organization. What responsibility does a company have to inform newly hired persons that it wants to shape their values, percepti..
Detail any lessons learned and strategies : Detail any lessons learned and strategies that you as managers will either avoid and/or engage in when designing the structure, building culture, and managing change in your organization.
Accrue interest on long-term debt in governmental funds : Governments are not required to accrue interest on long-term debt in governmental funds even if the interest is applicable to a current period and will be due the first day of the following year. Explain and justify the standards that permit this ..
Semi-annual compounding : Question 1: The six month and one-year rates are 3% and 4% per annum with semi-annual compounding. Is 3.90% or 3.95% or 3.99% closest to the one-year par yield expressed with semi-annual compounding?
Why is financial risk analysis important to a capital : Why is financial risk analysis important to a capital investment decision?
Identify and explain four recent regulations : Identify and explain four recent regulations that in your opinion have improved the quality of life in the United States. In your opinion, has regulation gone too far or not far enough
The treasurer of american airlines : The treasurer of American Airlines ca lls Citibank and asks for a quote on British pounds (GBPs) (to be used in conjunction with a three - month dollar - denominated bridge loan for terminal expansion at Heathrow). (Note: the base currency is listed ..
Explain why purchasing a high-growth mutual fund c : Explain why purchasing a high-growth mutual fund can be a worse investment than taking out a second mortgage on a home and investing in the market index in 250 words.

Reviews

Write a Review

Finance Basics Questions & Answers

  What was the original return on equity

What was the original return on equity

  What is the gain or loss on the futures contract

Suppose the December CBOT Treasury bond futures contract has a quoted price of 80-07. If annual interest rates go up by 1.00 percentage point, what is the gain or loss on the futures contract? (Assume a $1,000 par value, and round to the nearest w..

  Computation of total debt ratio

Computation of total debt ratio and A firm has a long-term debt-equity ratio of 4. Shareholders equity is $1 million

  It ended the year with155000 of retained earnings versus

during 2008 bascombakery paid out 33525 of common dividends. it ended the year with155000 of retained earnings versus

  Finance professor right

You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 14 percent with a volatility of 20 percent. Currently, the risk-free rate of interest is 3.8 percent.

  A firm is evaluating an accounts receivable change

A firm is evaluating an accounts receivable change that would increase bad debts from 2% to 4% of sales. Sales are currently 50,000 units, the selling price is $20 per unit, and the variable cost per unit is $15. As a result of the proposed change, s..

  The common stock of tower corporation sells for 4500 per

the common stock of tower corporation sells for 45.00 per share and the firm has just paid a dividend of 1.80. if the

  Employee impact on the plan

An organization can come up with the best strategy but in order to execute and be effective/successful it takes human capital to implement.

  Commit to a posted price what price maximizes profits

Your dealings on the secondhand market lead you to believe that there is a 0.4 chance a random buyer will pay $300,000, a 0.1 chance the buyer will pay $400,000, and a 0.25 chance it will not sell. If you must commit to a posted price what price m..

  Stockholders equity

Select any two companies in the same industry (for example, home improvement industry or candy industry). Use the Internet to find the companies' financial statements.

  Bill and warren are also looking at issuing preferred and

bill and warren are also looking at issuing preferred and common stock to further expand compus businesses. they also

  You have your choice of two investment accounts investment

you have your choice of two investment accounts. investment a is a 13-year annuity that features end-of-month 1400

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