Questions and Answers of Future of Business

Consider a position consisting of a $300,000 investment in asset A and a $500,000 investment in asset B. Assume that the daily volatilities of the assets are 1.8% and 1.2%, respectively, and that the
What is the difference between a long futures position and a short futures position?
You would like to speculate on a rise in the price of a certain stock. The current stock price is $29 and a three-month call with a strike price of $30 costs $2.90. You have $5,800 to invest.
It is July 2016. A mining company has just discovered a small deposit of gold. It will take six months to construct the mine. The gold will then be extracted on a more or less continuous basis for
What is arbitrage? Explain the arbitrage opportunity when the price of a dually listed mining company stock is $50 (USD) on the New York Stock Exchange and $60 (CAD) on the Toronto Stock Exchange.
A U.S. company knows it will have to pay 3 million euros in three months. The current exchange rate is 1.1500 dollars per euro. Discuss how forward and options contracts can be used by the company to
The price of gold is currently $1,200 per ounce. Forward contracts are available to buy or sell gold at $1,400 per ounce for delivery in one year. An arbitrageur can borrow money at 5% per annum.
Suppose that you enter into a short futures contract to sell July silver for $27.20 per ounce. The size of the contract is 5,000 ounces. The initial margin is $4,000, and the maintenance margin is
Suppose that in September 2016 a company takes a long position in a contract on May 2017 crude oil futures. It closes out its position in March 2017. The futures price (per barrel) is $58.30 when it
Explain how margin accounts protect futures traders against the possibility of default.
A trader buys two July futures contracts on orange juice. Each contract is for the delivery of 15,000 pounds. The current futures price is 120 cents per pound, the initial margin is$6,000 per
The forward price of the Swiss franc for delivery in 45 days is quoted as 1.1000. The futures price for a contract that will be delivered in 45 days is 0.9000. Explain these two quotes.Which is more
Suppose that on October 24, 2016, a company sells one April 2017 live-cattle futures contract.It closes out its position on January 21, 2017. The futures price (per pound) is 151.20 cents when it
Trader A enters into futures contracts to buy 1 million euros for 1.1 million dollars in three months. Trader B enters in a forward contract to do the same thing. The exchange rate(dollars per euro)
One orange juice futures contract is on 15,000 pounds of frozen concentrate. Suppose that in September 2016 a company sells a March 2018 orange juice futures contract for 120 cents per pound. In
Suppose that there are no storage costs for crude oil and the interest rate for borrowing or lending is 5% per annum. How could you make money if the June and December futures contracts for a
‘‘When the futures price for an asset is less than the spot price, long hedges are likely to be particularly attractive.’’ Explain this statement.
A company wishes to hedge its exposure to a new fuel whose price changes have a 0.6 correlation with gasoline futures price changes. The company will lose $1 million for each 1 cent increase in the
1. This case only discussed only a few of the risks that Gildan has to manage. Identify 10 that are not mentioned in the case.2. Do an internet news search for the most recent cyber attack. Were you
What are the various types of insurance available to businesses?
What is the difference between common shares and preferred shares?
What are dividends and retained earnings?
Describe the major differences between debt and equity financing.
How do companies obtain long-term financing?
What are the sources of short-term financing?
How can technology be used to help companies improve their credit and collection performance?
What is cash management, and why is it important in business?
What are the purposes of the three types of budgets mentioned in this chapter?
What is the goal of the financial manager? What are risk, return, and the risk–return trade-off?
List the responsibilities of the financial manager.
1. Why would a company “go public” or issue an IPO?2. What is the SEC? Why was it formed?3. Is it possible for the public to have all the information that insiders have? What rules are in place
What are the current trends in financial institutions?
What is the role of investment bankers and stockbrokers?
What are the securities markets? What are the two key securities markets?
What are some other types of securities (other than common shares, preferred shares, and bonds)?
Discuss the use of bonds as a form of liability.
What agency protects depositors’ money and to what limit?
What are some of the non-depository financial institutions?
What are chartered banks, and what are their roles?
What are some of the trends in marketing?
What are some of the key decisions in managing the logistical flow of products?
What is the goal of supply chain management? What are the logistical components of the supply chain?
List the factors that affect the promotional mix.
What is the promotional mix, and what options are available in this mix?
What are the goals of promotion?
Explain some of the criteria that managers must consider when deciding the mode of transportation.
What are the three degrees of market coverage for consumer products?
What are the roles of the Bank of Canada?
1. Construct an income statement and statement of financial position for Suncor from the information in the case.2. What is its debt-to-equity ratio? Do some Internet research and compare Suncor with
What trends are happening in the accounting field?
What do debt ratios measure? What does the debt-to-equity ratio measure?
What are activity ratios and which ones are mentioned in the chapter?
What do profitability ratios tell us? Which ratios are mentioned in the chapter?
Name and provide the formulas of the liquidity ratios mentioned in the chapter.
What is the purpose of the statement of income (income statement)? What does it include?
Explain the various categories of a balance sheet (statement of financial position).
What is IFRS? What is its function?
1. Research the brewing process online and construct a PERT chart for a craft brewery such as Fort Garry. Don’t forget to begin your process with recipe development and end it with a customer
What is modular production?
Discuss the importance of asset management.
How can technology be used to improve operating efficiencies and the ability for companies to compete?
Discuss some ways of improving production and operations.
What is scheduling? What are the three common scheduling tools available to management?
What are the considerations in formulating resource planning?
After management has decided on a location for their facilities, they need to design the facilities’ layout. What are some options in the design?
What are some of the considerations when determining the location of production facilities?
What is production planning? What is the production process, and what options are available to manufacturers?
Define production and operations management.
1. Check your mail (or ask a parent). Have you received a flyer from your service provider offering any new products to add to their bundle?2. What services do you think could be added into your home
What are some alternative channel arrangements?
What is the distribution channel? What are the functions of distribution channels?
Define marketing intermediaries. What are four common marketing intermediaries?
What are the various pricing strategies available to managers?
How are product prices determined?
What is the role of pricing in marketing?
Discuss the strategies for success at each stage of the product life cycle.
How are business products classified?
What are the four classifications of consumer products?
What are brands and brand loyalty? What are the different types of brands?
What is a product? How do products create value for the buyer?
1. What makes TRU’s research so important? How are teens today different from the teens of 1982, when TRU started?2. Is it possible for a company that began in 1982 to stay in touch with youth?
What is market research, and what are the steps in the market research process?
What can organizations do to influence ethical conduct?
What are some unethical business activities discussed in the chapter?
How does the idea of justice affect business?
What are some of the individual rights we enjoy in Canada?
What is utilitarianism?
How can being philanthropic help the bottom line of a company?
What responsibilities does a company have to the various stakeholders?
List the various stakeholders of an organization.
Give examples of legal but irresponsible business behaviours.
Define social responsibility.
How do diversity and multiculturalism impact Canadian business?
What are the major demographic groups by age? What are some characteristics of each group?
What is market segmentation? What are the five basic forms of consumer market segmentation?
What are the characteristics of the business-to-business market?
What influences consumers in their decision making?
What are the various competitive advantages that a company can create?
Why is it important for marketers to understand the external environment? What are the six general categories of the environment that marketers must evaluate?
What is the difference between customer value and customer satisfaction? How are these related to building relationships?

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