What steps does john needs to undertake in order to make

Assignment Help Financial Accounting
Reference no: EM132696415

If John is planning to use a forward contract to purchase 100 ounces of bronze in 2 months time. The current price of gold is 1 970 per unit. Assume that John can borrow and lend at 2.5% p.a. compounded half yearly.

Problem 1) Use the arbitrage-free pricing principle to calculate the fair forward price for gold per ounce.

Problem 2)  The forward price for purchase or sale of gold in two months time is 2 030 per unit. What steps does John needs to undertake in order to make an arbitrage profit from a forward contract on 100 units of gold in 3 months time. Outline all that needs to happen on all relevant dates, as well as today.

Problem 3) The forward price for purchase or sale of gold in two months time is 1 900 per unit. List and explain all the steps that Tom needs to undertake in order to make an arbitrage profit from a forward contract on 100 ounces of gold in two months time. Outline all that needs to happen on all relevant dates, as well as today

Reference no: EM132696415

Questions Cloud

Make a general ledger and balance sheet : Paid telephone bills of Rp. 120,000, -; electricity Rp. 100,000, -and water Rp. 80,000, - Make a general ledger and balance sheet
Discuss organization need for physical security : Discuss an organization's need for physical security. What methods, approaches, and models can be used by organizations when designing physical security needs?
What caress estimated inventory at july is : Caress Company uses the retail inventory method, Under the approximate average cost retail method, Caress' estimated inventory at July 31, 2020 is
Prepare an overview diagram of aker job-costing system : Prepare an overview diagram of Aker's job-costing system. Compute the total manufacturing overhead cost allocated to Job 360
What steps does john needs to undertake in order to make : What steps does John needs to undertake in order to make an arbitrage profit from a forward contract on 100 units of gold in 3 months time.
Make a journal of the trading company transactions : Make a journal of the trading company transactions. Feb , PT Buana sold merchandise cash worth Rp. million at the cost sales Rp. million
Define what changes might be ahead in corrections philosophy : In Chapter 3 the authors describe a progression of changes in corrections from The Reformatory Movement (1870s to 1890s) to the Crime Control Model.
Should a bank reconciliation take place : In managing company funds, transparency is required regarding the flow incoming funds disbursed funds, In your opinion, should a bank reconciliation take place?
What is the result of errors in journaling : PT Mei Bong's monthly telephone costs, Assume you are a Manager Finance, what is the result of errors in journaling and in what way you should do? Explain!

Reviews

Write a Review

Financial Accounting Questions & Answers

  What are the direct labor costs for the period

Factory overhead costs for this period were 3 times as much as the direct material costs. Prime costs totaled $2,000. Conversion costs totaled $3,280. What are the direct labor costs for the period?

  What is the npv of installing the machinery

What is the NPV of installing the machinery? You are analyzing the prospects of installing cost saving machinery. Depreciation is calculated straight line

  Compute shipping and warehousing cost per ton of llhc sold

Compute the shipping and warehousing cost per ton of LLHC sold by using the new method suggested by Jennifer and Kaylin.

  Questionlee financial services pays employees monthly

questionlee financial services pays employees monthly. payroll information is given below for january 2013 the first

  Uses a job order cost accounting system

FACTS: Samer Corp. uses a job order cost accounting system. The following is selected information pertaining to costs applied to jobs during the year. Jobs still in process at the end of the year: $167,000, which includes $65,000 direct labor costs. ..

  How much pay manufacturer for order of one hundred ten bike

Mack is given terms of 3/15 n/30, and he pays by day 15. How much will he pay the manufacturer for the order of 110 bikes if his price per bike is $390.93?

  Issuance of the bonds and entries to be passed post issue

Xonic Corporation issued $7,500,000 of 20-year, 8 percent bonds on April 1, 2015, at 102. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2035. Swanson's fiscal year ends on December 31..

  Explain the relevance of changes in net income to investors

Determine the net income for the current fiscal year (FY). Is this income up or down from the prior year? Explain the relevance of changes in net income to investors.

  What is the balance in the accumulated depreciation

What is the balance in the accumulated depreciation as of 31 December 20X2, if MC Ltd uses the asset 5,500 hours in 20X1 and 4,500 hours in 20X2?

  How post while preparing budget analysis

Depreciation is $30,000 for October and $36,000 for November and December due to the purchase in November. How post while preparing Budget analysis

  Calculate the labor cost and materials cost

In December, Sara’s Sodas produced 4.1 million liters of the beverage. Manufacturing overhead was $1,405,000 and the cost per liter was $0.41. Labor costs were 20 percent of materials cost. Calculate the materials cost for December. Calculate the lab..

  Disqualify a business or investment expenditure

Various criteria will disqualify the deduction of a business or investment related expenditure. Which of the following criteria will not disqualify a business or investment expenditure?

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