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Hedging Decisions
Your company has invested $6 million in a new Trilithium crystal technology project. The company will generate huge profits if the project is successful. As a risk hedge, the CFO decides to purchase equal risk derivatives. She buys two hundred 1-year put option contracts with an exercise price of $50. The cost of the option is $3.50 per share. Eight months later, the Trilithium crystal project is a big success and the current price of the underlying security is $66. She decides to sell the option at that time for $1.25 per share. How much has she made (or lost) on the hedging decision?
Critically analyze also elucidate real-life economic problems also opportunities by applying economic concepts, principles, and theory.
All firms in a Cournot monopolistically competitive industry have the same cost function C (q)= 25 + 10q. Compute the equilibrium price, total output, firm output and number of firms in the industry.
Compute the own price elasticity of demand whenever the price goes from $5 to $4.
you select to work more hours or fewer when offered a higher hourly salary.
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To increase marketplace share, Giuseppe would like to raise sales to 750 every week. Elucidate price should Giuseppe set.
The manager of a national retailing outlet recently hired an economist to estimate the firm's production function. Based on the economist's report, the manager now knows that the firm's production function
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A monopolist faces demand curve p = 11-Q , where Q is measured in thousands of units. Compute the firm's degree of monopoly power using the Lerner index?
Suppose that Demand and Supply curves for coffee bean is given by-What value of t maximizes Government's tax revenue?
Draw a current budget constraint for an assumed single mother (net of child care costs) who loves leisure. Draw the new constraint. Discuss the likely effects on labor force participation and hours of work.
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