Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

You have 1 million barrels of oil at a current price of S0 = $25 per barrel. The current quoted futures price for delivery of oil in about 1 years' time is F = $26.25 per barrel. You want to hedge your spot oil position by using futures. The spot price of oil in 11½ months' time is S1 = $20 per barrel and the futures price (for delivery in 2 weeks) is F1 = 20.042 ($ per barrel). What is the effective value of your hedged position in 11½ months' time?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M940484

Have any Question? 


Related Questions in Basic Finance

For each of the following situations determine whether a

For each of the following situations, determine whether a long or short hedge is appropriate. Justify your answers. a. A firm anticipates issuing stock in three months. b. An investor plans to buy a bond in 30 days. c. A ...

Compute the intrinsic values time values and lower bounds

Compute the intrinsic values, time values, and lower bounds of the following calls. Identify any profit opportunities that may exist. Treat these as American options for purposes of determining the intrinsic values and t ...

1 explain what happens to the postmerger earnings per share

1. Explain what happens to the postmerger earnings per share figure when a company with a relatively high P/E ratio acquires a company with a lower P/E ratio, assuming that the exchange ratio is based on current stock ma ...

Terry malloy is trying to decide whether his shipping

Terry Malloy is trying to decide whether his shipping company should invest in a new boat.  The new boat will cost $200,000 and it will be fully-depreciated on a straight-line basis over its 10-year useful life.  The new ...

What is storage why is it risky what role does it play in

What is storage? Why is it risky? What role does it play in the economy? Why is delivery important if so few futures contracts end in delivery? What are the major functions of derivative markets in an economy? Why is spe ...

Generate optimal code using two registers for each of the

Generate optimal code using two registers for each of the expressions of Exercise 8.10.1. Exercise Compute Ershov numbers for the following expressions:

Search for pricing for an mri for a 13-year-old female

Search for pricing for an MRI for a 13-year-old female patient complaining of headaches. Determine the cost of this procedure to you and what the cost is to the insurance provider. Do a price comparison against three oth ...

1 what are the advantages and disadvantages of usinga

1. What are the advantages and disadvantages of using (a) figures, (b) tables, and (c) text to report the results of experiments in the research report? 2. Differentiate between random sampling and random assignment. Whi ...

1 why might the decision to own rather than lease real

1. Why might the decision to own rather than lease real estate have an unfavorable effect on the corporation's financial statements? 2. Why might the cost of a mortgage loan be greater than the cost of using unsecured co ...

1 why consider agency and corporate bonds over treasuries2

1. Why consider agency and corporate bonds over Treasuries? 2. What are the major reasons why investors should consider buying convertible bonds? 3. What are the risks of zero-coupon securities?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen