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Seth McDonald grows corn. In May, he decides to sell 3 contracts, about half of his expected? crop, for December delivery. The contract price is $3.65 per bushel and the contract size is 5,000 bushels. Shortly before the delivery date, corn is selling in the spot (immediate delivery) market for $3.85 per bushel.
A. Seth can protect his profit by buying an offsetting contract.
B. Seth can hold on to his corn for several months and hope that the price to rises enough to offset his loss.
C. Seth will simply let the contract expire and sell his corn in the spot market.
D. Seth has an opportunity loss of $3,000 because he must deliver corn at the lower price.
Some economists believe that investment banks ________ IPOs; the evidence they point to is that the stock price ________ in the secondary markets.
You are deciding whether to add Bard Publishing to your portfolio, but you are concerned about your projection for their growth rate. Bard's cost of equity capital (the discount rate for equity) is known to be 8% and they just paid a dividend of $4.7..
At the end of each quarter, a 30-year-old woman puts $2000 in a retirement account that pays 6% interest compounded quarterly. When she reaches 55, she withdraws the entire amount and puts it in a mutual fund that pays 8.7% interest compounded monthl..
“Is it ethical for large firms to unilaterally lengthen their payables periods, particularly when dealing with smaller suppliers? Why or Why not?”
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Arbitrage Financial is offering two possible investments with the same level of risk.
Your firm is contemplating the purchase of a new $850,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $75,000 at the end of that time. You will save $320,000 before..
Calculate the Holding Period Return: Calculate the expected rate of return: You are holding four portfolios. It has different expected rate of return and risk level of %. What is your expected return of your three investment?
Wendy purchased 800 shares of Robotics Stock at $3 per share on 1/1/09. Wendy sold the shares on 12/31/09 for $3.45. Genetics stock has a beta of 1.3, the risk-free rate of return is 3%, and the market risk premium is 8%. The required return on Genet..
Explain how strategic plan criteria are utilized and weighted in the capital budgeting process, thereby facilitating capital decision making.
what is the firm's ROA?- A firm has a profit margin of 16 percent on sales of $26,000,000. - The firm also has debt of $5,500,000.
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