The storage cost for soybeans is 0.05 per bushel for six, Ask an Expert

Finance

Assume that the spot price and the six-month futures price of soybeans are $4.80 and $5.20 per bushel, correspondingly. One futures contract is for buying 5,000 bushels. The six-month risk-free interest is 6% per year. The storage cost for soybeans is $0.05 per bushel for six months, paid in advance. Could you make an arbitrage profit in the soybean market? describe how?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M922037

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Bond valuation relationshipsthe 13-year 1000 par value

(Bond valuation? relationships) The 13?-year, ?$1,000 par value bonds of Waco Industries pay 8 percent interest annually. The market price of the bond is ?$1,085?, and the? market's required yield to maturity on a? compa ...

Please help me study for a test by helping me with this

Please help me study for a test by helping me with this question. Please show work/formulas used and accuracy really matters. Thanks. What is the APR on a loan from American Pride Payday Loan Store? You've borrowed $200, ...

Question - bridgestone a japanese-based company receives

Question - Bridgestone, a Japanese-based company, receives recurring income in USD of about USD 5 billion per year. The current exchange rate is ¥120/USD. The annualized exchange rate volatility is 10%. The interest rate ...

Suppose that a mutual fund that tracks the sampp has mean

Suppose that a mutual fund that tracks the S&P has mean E(Rm) = 16% and standard deviation σm = 10%, and suppose that the T-bill rate Rf = 8%. Answer the following questions: (a) What is the expected return and standard ...

Consider the following scenario analysisrate of

Consider the following scenario analysis: Rate of Return Scenario Probability Stocks Bonds Recession 0.20 -4% 16% Normal economy 0.50 18 9 Boom 0.30 29 6 a. Is it reasonable to assume that Treasury bonds will provid ...

Suppose community bank offers to lend you 10000 for one

Suppose Community Bank offers to lend you $10,000 for one year at a nominal annual rate of 8.00%, but you must make interest payments at the end of each quarter and then pay off the $10,000 principal amount at the end of ...

Leo received 7500 today and will receive another 5000 two

Leo received $7,500 today and will receive another $5,000 two years from today. He will invest these funds when he receives them and expects to earn a rate of return of 11.5 percent. What value does he expect his investm ...

1 you are valuing a common stock that just paid a dividend

1.) You are valuing a common stock that just paid a dividend of $1.25 per share. You are expecting the stock to grow at the rate of 4% annually, and the stock to give you a return of 9%. What should be the price of the s ...

Question - payday loans are very short-term loans that

Question - Payday loans are very short-term loans that charge very high interest rates. You can borrow $500 today and repay $550 in two weeks. What is the compound annual rate implied by this 10 percent rate charged for ...

A firm is considering the two mutually exclusive

A firm is considering the two mutually exclusive investments projects. Project Alpha requires an initial outlay of $600 and will return $160 per year for the next seven years; Project Beta requires an initial outlay of $ ...

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

Recent Questions

Ask Basic Finance Expert