User Account

All Pages

Trying to manage the risk associated with crude oil prices

Assignment Help Financial Management
Reference no: EM132056888

OU Energy Company is trying to manage the risk associated with crude oil prices. The current spot price for crude oil is $100. After evaluating what OU believes will happen with crude oil prices, they enter into a Forward contract with Samantha Oil. The terms of the Forward are that OU has agreed to buy 10,000 barrels of oil one year from today from Samantha Oil. The current cost of storing oil like this is $1.50 per barrel per quarter - payable at the beginning of each quarter. The current risk - free interest rate is 3%

What is the correct forward price for this deal?

Reference no: EM132056888

Questions Cloud

Calculate standard deviation of returns for company shares : Calculate the yearly returns for this share. Calculate the standard deviation of returns for the company's shares.
What net reduction in retained earnings : On that date, when the market price of Oliver was $21 per share, What NET reduction in retained earnings would result from this property dividend
Compute the present value of the woodland : Question 1: Compute the present value of the woodland. Assuming 15% required rate of return
What are the npv and irr in given : A product line can sell 80,000 products per year for 4 years (after which time this project is expected to shut down). The product will for $5 each.
Trying to manage the risk associated with crude oil prices : OU Energy Company is trying to manage the risk associated with crude oil prices. What is the correct forward price for this deal?
How is weighted average yield calculated : How is weighted average yield calculated and what does it mean?
Discuss about the dividend-discount model : Procter and Gamble (PG) paid an annual dividend of $1, 75 in 2009. You expect PG to increase its dividends by 7.5% per year for the next five years.
What is the equation for the facilities cost : Professional University teaches a large range of undergraduate courses. Itis interested in te determining the cost equation for the facilities.
Possible values of ebit : GTB, Inc., has a 25 percent tax rate and has $85,536,000 in assets, currently financed entirely with equity. Equity is worth $6 per share, and book value

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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