Question: On JAN 1 2006 AMARANTH opened the spread: Long APR 2007 Short MAR 2007 for $1.90/unit. AMARANTH speculated that the spread will Widen and

On JAN 1 2006 AMARANTH opened the spread: Long APR 2007 Short MAR 2007 for $1.90/unit. AMARANTH speculated that the spread will Widen and used 20,000 NG futures in the spread. Every NG futures is for 10,000 units. 8.1 Show how this spread would have been closed on JUL 27, 2006, when the spread was $2.60/unit, if AMARANTH had closed it. Calculate the total Profit/Loss. 8.2 AMARANTH did not close the spread on JUL 27, 2006 but was forced to close the spread on SEP 15, 2006 when the spread was at $0.50/unit. Show how the spread was closed and calculate the total Profit/Loss.

Step by Step Solution

★★★★★

3.51 Rating (151 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

81 Closing the Spread on July 27 2006 Given Spread opened on Jan 1 2006 for 190unit Spread closed on ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

One of the products of the G. A. Tanner Company is a special kind of toy that provides an estimated unit profit of $3. Because of a large demand for this toy, management would like to increase its...

Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...

The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

Q8. On JAN 1 2006 AMARANTH opened the spread: Long APR 2007 Short MAR 2007 for $1.90/unit. AMARANTH speculated that the spread will Widen and used 20,000 NG futures in the spread. Every NG futures is...

The number of bicycle. helmets a retail chain is willing to sell per week at a price of Spis given by z = ap+b-c where a = 79,b=21, and c = 358. Find the instantaneous rate of change of the supply...

1)Assume that on JAN 15, 21 the market prices are as given below: Delivery Month settle JAN, 15 21 MAR21 338.50 MAY21 339.75 JUL21 350.50 SEP21 355.25 DEC21 360.85 MAR22 364.75 The speculator closes...

These two questions is what I will present, and please read through the case first then answer these two questions. Thank you! 1. Suppose you expected the dollar to appreciate in value by 10% against...

Dear Dr Fids, Can you please help these questions? It is about MBS cash flow. R Generating MBS cash flows can be messy so we are going to write some functions in R that allows us to generate the cash...

Look at slide 23 in L6. First, ignore all cases that we did in class (i.e., on rows 1,7 and 15 on that slide). Then, each group will work on one of the remaining cases. Your task is to describe...

Please answer in paragraphs not only bullet points (with explanation for each point). The relevant images for the information are attached below, if any other source is used please cite, but please...

a. Use a spreadsheet to calculate the durations of the two bonds in Spreadsheet 1 if the annual interest rate increases to 12%. Why does the duration of the coupon bond fall while that of the zero...

Ralph dies without having made a will. He is survived by many relativesa spouse, children, adopted children, sisters, brothers, uncles, aunts, cousins, nephews, and nieces. What determines who gets...

How do Topical tax services work:a . have explanations that are organized by Internal Revenue Code section numbers b . provide annotations c . divide the tax law into transactions and related subject...

(Two Temporary Differences, One Rate, Beginning Deferred Taxes) The following facts relate to Alschuler Corporation. 1. Deferred tax liability, January 1, 2010, $40,000. 2. Deferred tax asset,...

(Three Differences, Compute Taxable Income, Entry for Taxes) Havaci Company reports pretax financial income of $80,000 for 2010. The following items cause taxable income to be different than pretax...

(One Temporary Difference, Future Taxable Amounts, One Rate, Beginning Deferred Taxes) Brennan Corporation began 2010 with a $90,000 balance in the Deferred Tax Liability account. At the end of 2010,...

The trial balance of Concord Bed and Breakfast Corporation at December 31, 2012, and the data needed for the month-end adjustments follow. Adjustment data at December 31 follow: a. Prepaid insurance...

In Figure a climber with a weight of 533.8 N is held by a belay rope connected to her climbing harness and belay device; the force of the rope on her has a line of action through her center of mass....

Over time, sales territories:increase in sales potential.decrease in sales potential.increase in workload.decrease in workload.It depends a given territory might increase or decrease in either...

Residential real estate in New York rents for an average of $44 per square foot, for a certain segment of the market. If the population standard deviation is $7, and a random sample of 50 properties...

A company is considering five possible names for its new product. Before choosing a name, the firm decides to test whether all five names are equally appealing. A random sample of 100 people is...

A car manufacturer wants to estimate the average miles-per-gallon highway rating for a new model. From experience with similar models, the manufacturer believes the miles-per-gallon standard...

Write the meaning of each of the following terms without referring to the book (or your notes), and compare your definition with the version in the text for each. a. ARIMA b. Autoregressive process...

Run 5-percent DickeyFuller tests for the following variables from the chicken demand equation, using dataset CHICK9 on the texts website, and determine which variables, if any, you think are...

R. Amatya estimated the following logit model of birth control for 1,145 continuously married women aged 35 to 44 in Nepal: Where: D i = 1 if the ith woman has ever used a recognized form of birth...