What is the profit or loss on your futures position

Assignment Help Financial Management
Reference no: EM131905300

Suppose today is May 1, 2014, and your firm produces breakfast cereal and needs 115,000 bushels of corn in July 2014 for an upcoming promotion. You would like to lock in your costs today because you are concerned that corn prices might rise between now and July. Use Table 23.1

a. What total cost would you effectively be locking in based on the closing price of the day? (Round your answer to the nearest whole number, e.g., 32.)

Total cost $

b. Suppose corn prices are $5.03 per pound in July. What is the profit or loss on your futures position? (Enter your answer as a positive number. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

(Click to select) ProfitLoss $

Reference no: EM131905300

Questions Cloud

How much is the bond accrued interest : How much is the bond’s accrued interest? How much is the bond’s dirty price?
Acetate debt-equity ratio-weighted average cost of capital : What is Acetate’s debt-equity ratio? What is the firm’s weighted average cost of capital?
Optimal fraction of debt and growth rate of firm : Define the optimal fraction of debt and the growth rate of a firm. What is the relationship between the two? Risk aversion means:
Two ex- dividend dates if option is american call : Please determine if there is an early exercise possibility at either of the two ex- dividend dates if the option is an American call.
What is the profit or loss on your futures position : Suppose corn prices are $5.03 per pound in July. What is the profit or loss on your futures position?
Pound at expiration : What will your profit or loss be if coffee prices turn out to be $2.0108 per pound at expiration?
What is the total cost for one contract : How much does your option cost per bushel of corn? What is the total cost for one contract? Assume each contract is for 5,000 bushels.
Were management decisions to stay competitive sound : Were management's decisions to stay competitive sound? What course of action do you recommend for the management of Green Pastures?
Commercial banks are primary source of debt capital : In the US, commercial banks are the primary source of debt capital for existing (not new) businesses?

Reviews

Write a Review

Financial Management Questions & Answers

  Generally can be traced directly to units of product

Which of the following costs generally can be traced directly to units of product?

  Four-year project to improve its production efficiency

CSM Machine Shop is considering a four-year project to improve its production efficiency. The shop’s tax rate is 35 percent and its discount rate is 11 percent.

  What is the effective annual rate annual percentage yield

You plan to apply for a loan from Bank of America. The nominal interest rate for this loan is 7.67 percent, compounded daily (with a 365 day per year.) What is the effective annual rate (EAR) annual percentage yield, of this loan?

  How much was in account ten years after deposit was made

Six years after Mr. Robertson deposited $7110.00 in a savings account that earned interest at 6.8% p.a., compounded semi-annually, the interest was changed to 7.2% p.a., compounded quarterly. How much was in the account ten years after the deposit wa..

  Current spot exchange rate-relative purchasing power parity

Take the current spot exchange rate to be $1.3194/£. Suppose that the expected inflation over the coming year is 0.75% in the UK and 2.25% in the United States. What is the expected value for the spot exchange rate a year from now, according to relat..

  What will be start-ups ratio of market value to book value

Start-up Industries is a new firm, which has raised $100 million by selling shares of stock. Management expects to earn a 24% rate of return on equity, which is more than the 15% rate of return available on comparable-risk investments. Half of all ea..

  What is the value of levered equity

Relay Inc. keeps a constant debt to equity ratio policy equal to 0.8 and its wacc is 13%. The company has an expected net income equal to $12,054,021 for next year and its assets are completely depreciated. If the corporate tax rate is 34%o what is t..

  What is after-tax return to company from opening restaurant

What is the after-tax return to the company from opening the new restaurant assuming the building is leased?

  The average annual return for berkshire hathaway

The average annual return for Berkshire Hathaway from January 1, 1965 to December 31, 2013 was 19.70%.

  Firm balance sheet provide to the viewing public

What information does a firm's balance sheet provide to the viewing public?

  Shares of common stock outstanding with market price

A firm has 3,000,000 shares of common stock outstanding with a market price of $20.00 per share. Calculate the WACC.

  Constructed pro forma balance sheet for next year

You constructed a pro forma balance sheet for next year and found that external financing required was negative (i.e., the company projected a financing surplus). Which of the following options, all else equal, would NOT correct the projected imbalan..

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