Calculate the price of a forward contract, Microeconomics

Assignment Help:

Commodities

A)

It is well documented that commodity prices are very volatile when compared to other asset classes.  Discuss factors that cause volatility in the commodity markets.

5B)

For the following questions assume the risk free rate of return is 2.50%

Your company imports large quantities of oil.  On January 1st 2011 the spot price of oil is $70.  You are concerned that recent events will drive the price of oil higher in 90 days time when you will need to purchase a large quantity. Under these circumstances calculate the price of a forward contract. In 90 days time the spot price of oil is $125; calculate the profit or loss of your forward position.

What is the 10 month forward price of a dividend security based on the following information:

Current price

$110.00

Quarterly dividend

$1.00

Dividend payment dates:

3M, 6M, 9M


Related Discussions:- Calculate the price of a forward contract

Economic instruments, Economic instruments Financial rewards, incentives an...

Economic instruments Financial rewards, incentives and penalties that operate automatically via market forces, to encourage beneficial behavior.

What are some ways for increase revenue, You've been contacted by a local s...

You've been contacted by a local semi-professional team in Colfax, known locally as the Colfax Thunder. They play their home games at the HS baseball park for only $100 per month.

State intervention in an economy, Problem 1: The last half-century has ...

Problem 1: The last half-century has witnessed major changes in the role that governments of developing countries have played, especially in terms of public spending. (a) Ex

Firms in a competitive markets, illustrate a long-run equilbrium using diag...

illustrate a long-run equilbrium using diagrams for the gold market and for a representative gold mine

A potato chip industry, run a s monopoly how will this benefit stakeholders...

run a s monopoly how will this benefit stakeholders involved, such as the goverment, businesses, and consumers?

Determine the wage of labor, Consider a hypothetical nation, Solowland, whi...

Consider a hypothetical nation, Solowland, which were in the steady state. We consider a constant return to scale production function based on two production factors, labor and cap

Elasticity, if you were making the pricing decision for the gasoline compan...

if you were making the pricing decision for the gasoline company, would you cut, raise or leae the price unchanged

2 econ problems, I have the answers to these two questions, but I need to k...

I have the answers to these two questions, but I need to know HOW to get these answers. Thanks. Question 1 Suppose there are two goods beverage and pizza and two inputs land, T

Inverse market demand curve, Problem: i) The  inverse market demand cur...

Problem: i) The  inverse market demand curve for a Stackelberg leader and follower is given by  P = 10  - Q. If each has  a marginal cost of $4, what will be the equilibrium qu

Write Your Message!

Captcha
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