What is a forward transaction and a forward contract

Assignment Help Finance Basics
Reference no: EM131305291

1. What is a forward transaction? What is a forward contract?

2. What is the spot price? What is the settlement date?

3. An opinion column in the Wall Street Journal observes: "Speculators earn a profit by absorbing risk that others don't want. Without speculators, investors would find it difficult to quickly hedge or sell their positions." In what sense do speculators earn a profit by absorbing risk? Why would the absence of speculators make it difficult for investors to quickly hedge or sell their positions?

Reference no: EM131305291

Questions Cloud

Were the variables being manipulated properly : Provide specific and detailed feedback to at least two classmates on 1 or more proposed hypotheses. Did the hypothesis make sense? Were the operationalizations clearly defined? Were the variables being manipulated properly? Was it a 2x2 design wit..
What is the difference between hedging and speculating : What are derivatives?- What is the difference between hedging and speculating?- Why might a corn farmer want to hedge against volatile corn prices?
What risk do you face from price fluctuations : In each of the following situations, what risk do you face from price fluctuations? What would have to be true of a derivatives security if the security were to help you to hedge this risk?
What is the goal of emergency management : How much money did the federal government spend in the response to and recovery from the September 11 attacks?
What is a forward transaction and a forward contract : What is a forward transaction? What is a forward contract? - What is the spot price? What is the settlement date?
What counterparty risk is involved with forward contracts : What is counterparty risk? What counterparty risk is involved with forward contracts? Why are investors and firms that enter forward contracts willing to accept counterparty risk?
Identify the total number of conditions : dentify the total number of conditions. Identify the manipulated variable(s). Is this an IV X PV design? If so, identify the participant variable(s). Is this a repeated measures design? If so, identify the repeated variable(s). Identify the dependent..
What is the difference between hedging and speculating : What is the difference between hedging and speculating? Give an example of speculating using commodity futures and speculating using financial futures.
What would a farmer hope to gain by doing so : What would a farmer hope to gain by doing so? Would General Mills buy or sell futures contracts in wheat? What would it hope to gain by doing so?

Reviews

Write a Review

Finance Basics Questions & Answers

  Would you undertake the modified project

Consider a project with an initial cost of $1,000 in Year 0, in which 3 scenarios can occur, with the probabilities and cash flows (CF) as shown in the table. The appropriate cost of capital is 11.5%.

  Audit assurance and overall assurance

Auditors frequently refer to the terms audit assurance, overall assurance, and level of assurance to refer to

  Coupon rate when the coupon payments

What is the duration of a five-year Treasury bond with a 10% coupon rate when the coupon payments are made every 6 month? The bond is currently selling at 5% discount (its market value equal to 95% of the face value).

  How the clearinghouse operates to protect the futures market

What are their advantages and disadvantages? Explain how the clearinghouse operates to protect the futures market

  Evaluate walmarts new marketing campaign and tagline

Evaluate Walmart's new marketing campaign and tagline. Did the company make the right decision to drop "Always Low Prices. Always." As a tagline? Why or why not?

  To ensure the tax deduction always being realised

A firm has an expected before tax earnings of $1000 a year in perpetuity, The firm can borrow at the rate of 8%. The corporate tax rate is 40%. To ensure the tax deduction always being realised in the same year of the interest payment, the firm shoul..

  Describe the three types of project risk

Describe the three types of project risk. Under what situation in each of the types most relevant to the capital budgeting decision.

  Calculate the interest rate associated

What impact, if any, would the fact that the firm could stretch its accounts payable (net period only) by 20 days from supplier A have on your answer in part (b) relative to this supplier?

  Difference between venture capital and private equity firms

What is the difference between venture capital firms and private equity firms? What roles do they play in the financial system?

  Sales for fast kat a 16-foot catamaran sailboat have

sales for fast kat a 16-foot catamaran sailboat have averaged 250 boats per month over the last five years with a

  Probability that the worker finishes

Suppose a worker needs to process 100 items. The time to process each item is exponentially distributedwith a mean of 1 minute, and the processing times are independent. Approximately, what is the probability that the worker finishes in less than ..

  Estimate the effective cost of the credit line

You decide to establish the line of credit for $40 million. Currently, your company does not hold balances in their accounts at the bank and pays fees for all cash management services.

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!

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