Business, 06.03.2020 18:52 khollier3119

Consider the market for wheat. The current price of a ton of wheat is 250 USD. In the next year, the price will be 310 with probability 1/3 and 220 with probability 2/3. The interest rate between the two years is 5% i) Compute the price of a future that allows to purchase a ton of wheat next year for 300 USD. ii) Compute the price of a call option on a ton of wheat with a strike price of 300 USD. The option can be exercised a year from now. 3 iii) Where is the difference in this two prices coming from? iv) Compute the price of a put option on a ton of wheat with a strike price of 305 USD. The option can be exercised a year from now. v) Compute the expected return of a portfolio composed of the future in part (i) and the put option in part

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 14:50

Baker industries’s net income is $24,000, its interest expense is $5,000, and its tax rate is 40%. its notes payable equals $27,000, long-term debt equals $75,000, and common equity equals $250,000. the firm finances with only debt and common equity, so it has no preferred stock. what are the firm’s roe and roic?

Answers: 2

Answer

Business, 21.06.2019 19:30

What is the most important factor that affects the value of a company? a) cash flow b) earnings c) supply and demand d) number of employees

Answers: 1

Answer

Business, 22.06.2019 15:20

Gulliver travel agencies thinks interest rates in europe are low. the firm borrows euros at 5 percent for one year. during this time period the dollar falls 11 percent against the euro. what is the effective interest rate on the loan for one year? (consider the 11 percent fall in the value of the dollar as well as the interest payment.)

Answers: 2

Answer

Business, 22.06.2019 19:30

Problem page a medical equipment industry manufactures x-ray machines. the unit cost c (the cost in dollars to make each x-ray machine) depends on the number of machines made. if x machines are made, then the unit cost is given by the function =cx+−0.3x2126x31,935 . how many machines must be made to minimize the unit cost?

Answers: 3

Answer

You know the right answer?

Consider the market for wheat. The current price of a ton of wheat is 250 USD. In the next year, the...

Questions