Your utility company will need to buy 100,000 barrels of oil in 10 days' time, and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Your utility company will need to buy 100,000 barrels of oil in 10 days' time, and it is worried about fuel costs. Suppose you go long (buy) 100 oil futures contracts, each for 1000 barrels of oil, at the current futures price of $60.04 per barrel. Suppose futures prices change each day as follows. 1 a. What is the marking-to-market profit or loss (in dollars) that you will have on each date? b. What is your total profit or loss after 10 days? Have you been protected against a rise in oil prices? c. What is the largest cumulative loss you will experience over the 10-day period? In what case might this be a problem? a. What is the marking-to-market profit or loss (in dollars) that you will have on each date? (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Day 0 1 Day 1 2 Price $ 60.04 $ 59.51 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Day 2 3 Price Day 3 4 Price $ 59.51 $ 57.46 $ $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Price Price Change Price Price Change Price Price Change $ 57.46 $ 57.76 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Price Price Change Profit/Loss Price Change $ Profit/Loss $ 57.76 $ 57.99 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Price Change Profit/Loss Price Change $ Profit/Loss Day 4 $ 57.99 59.54 $ 5 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) $ Profit/Loss $ Day 5 $ 59.54 $ 6 $ 60.51 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Profit/Loss Profit/Loss Day 6 $ 60.51 60.73 $ 7 $ $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Your utility company will need to buy 100,000 barrels of oil in 10 days' time, and it is worried about fuel costs. Suppose you go long (buy) 100 oil futures contracts, each for 1000 barrels of oil, at the current futures price of $60.04 per barrel. Suppose futures prices change each day as follows. 1 a. What is the marking-to-market profit or loss (in dollars) that you will have on each date? b. What is your total profit or loss after 10 days? Have you been protected against a rise in oil prices? c. What is the largest cumulative loss you will experience over the 10-day period? In what case might this be a problem? a. What is the marking-to-market profit or loss (in dollars) that you will have on each date? (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Day 0 1 Day 1 2 Price $ 60.04 $ 59.51 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Day 2 3 Price Day 3 4 Price $ 59.51 $ 57.46 $ $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Price Price Change Price Price Change Price Price Change $ 57.46 $ 57.76 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Price Price Change Profit/Loss Price Change $ Profit/Loss $ 57.76 $ 57.99 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Price Change Profit/Loss Price Change $ Profit/Loss Day 4 $ 57.99 59.54 $ 5 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) $ Profit/Loss $ Day 5 $ 59.54 $ 6 $ 60.51 $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.) Profit/Loss Profit/Loss Day 6 $ 60.51 60.73 $ 7 $ $ (Round the price change to the nearest cent and the profit/loss to the nearest dollar.)
Expert Answer:
Related Book For
Posted Date:
Students also viewed these databases questions
-
Your utility company will need to buy 100,000 barrels of oil in 10 days time, and it is worried about fuel costs. Suppose you go long 100 oil futures contracts, each for 1000 barrels of oil, at the...
-
6. Use the same set of information given in the problem above. (a) Use S&P 500 future prices to calculate the implied dividend yield on S&P 500. For simplicity, assume you can borrow or deposit money...
-
What does this code print (unless it produces an error)? = plane "A passengers" plane [2] = "m" print (plane)
-
Robert Shiller asked a sample of the general public and a sample of economists the following question: "Do you agree that preventing high inflation is an important national priority, as important as...
-
Journalize the following sales transactions for Antique Mall. Explanations are not required. Jan. 4 Sold $ 12,200 of antiques on account, credit terms are 3/15, n/30. Cost of goods is $ 6,400. 8...
-
The table below describes a hypothetical experiment on 2400 persons. Each row of the table specifies a category of person, as defined by their pre-treatment predictor $x$, treatment indicator $T$,...
-
Rank the following securities from lowest (1) to highest (8) in terms of their riskiness for an investor. All securities (except the Treasury bond) are for a given firm. If you think two or more...
-
Let f(x)= == 3x+7x-6 Find the equations of the horizontal asymptotes and the vertical asymptotes of f(x). If there are no asymptotes of a given type, enter 'NONE'. If there is more than one asymptote...
-
AP Vianne is the management accountant for Divvy, a bike-sharing service in Chicago. She is trying to plan for summer activity by using the most recent ridership information provided. She needs to...
-
The input voltage for the bandreject filter shown in Fig 2 is 80coseot, calculate: d-B (BW) in Hz i- Write the steady state expression for Vo(t) when o-o, o-oel, 0 o2, 00.1e& o-100 f-fet g- oa &...
-
Consider the experiment of selecting three items (without replacement) from a sample space of 100 , of which 5 items are defective. Let \(A_{1}=\{\) first item selected is defective \(\}, A_{2}=\)...
-
Find the binomial probabilities in Problems 3-10. \(n=5, X=3, p=0.30\)
-
A manufacturer of water test kits knows that about \(0.1 \%\) of the test strips in the kits are defective. Write the binomial probability formula that would be used to determine the probability that...
-
The following problem appeared in an "Ask Marilyn" column, by Marilyn Vos Savant: There are five cars on display as prizes, and their five ignition keys are in a box. You get to pick one key out of...
-
You have five alternatives from which to choose. List your preferences for the alternatives from best to worst. I. Sure win of \(\$ 5\) and no chance of loss II. \(6.92 \%\) chance to win \(\$ 20\)...
-
Chattanooga has 0.7 per capita visits and $25 OOP costs. Memphis has 0.5 per capita visits and $50 OOP costs. a.) What is the price elasticity of demand for wellness visits in Tennessee using this...
-
Explain the circumstances that could result in a long-term bank loan being shown in a statement of financial position as a current liability.
-
Explain why risk-neutral probabilities can be used to price derivative securities in a world where investors are risk averse.
-
It is September 13, 2012, and you own IBM stock. You would like to insure that the value of your holdings will not fall significantly. Using the data in Problem 3, and expressing your answer in terms...
-
Compute the 95% confidence interval of the estimate of the average monthly return you calculated in Problem 13(a).
-
When would you prefer to use busy-wait I/O over interrupt-driven I/O?
-
Draw UML diagrams for the read of one character from an 8251 UART. To read the character from the UART, the device needs to read from the data register and to set the serial port status register bit...
-
Draw a UML state diagram for software processing of a vectored interrupt. The vector handling is performed by software (a generic driver) that executes as the result of an interrupt. Assume that the...
Study smarter with the SolutionInn App