Question: Please help me b) A refiner has 250 metric tons of Crude Palms Oil (CPO) in inventory and will hold it for the next 3

Please help me b) A refiner has 250 metric tons of

Please help me

b) A refiner has 250 metric tons of Crude Palms Oil (CPO) in inventory and will hold it for the next 3 months. Current in Bursa Malaysia, one contract is 25 metric tons. The refiner intends to protect against the falling price of CPO to prevent losses. With the following information determine: Current inventory = 250 metric tons Spot price RM2, 175 per ton Annual storage cost 4% per annum Risk free rate 6% per annum 3 mnts CPO futures E RM2,230 per ton (i) The correct price of futures and compare with the quoted future price. (5 marks) (ii) The arbitrage strategy. (2 marks) (iii) The profit if you invested 50 metric tons with the maturity price at RM2,233. (12 marks)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

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!

b) A refiner has 250 metric tons of Crude Palms Oil (CPO) in inventory and will hold it for the next 3 months. Current in Bursa Malaysia, one contract is 25 metric tons. The refiner intends to...

A refiner has 250 metric tons of Crude Palms Oil (CPO) in inventory and will hold it for the next 3 months. Current in Bursa Malaysia, one contract is 25 metric tons. The refiner intends to protect...

A refiner has 3 0 0 tons of Crude Palms Oil ( CPO ) in inventory and will hold it for the next 3 months. Current in Bursa Malaysia, one contract is 2 5 metric tons. The refiner intends to protect...

Question 1 A) You are a palm oil trader. You have a commitment to buy 1,000 tons of crude palm oil (CPO) from a miller, and another commitment to sell 1,000 tons of CPO to a refiner. The transaction...

Attached is a file. See page 14. I need answer for part e). Please read instructions for rounding rules. UNIVERSITY OF MANITOBA Faculty of Management Department of Accounting and Finance Professors:...

HI! can you please answer the Long answer question #1, part h), on the attached file! Thank you very much UNIVERSITY OF MANITOBA Faculty of Management Department of Accounting and Finance Professors:...

Attached is a file. See page 14. I need answer for part d). Please read instructions for rounding rules. UNIVERSITY OF MANITOBA Faculty of Management Department of Accounting and Finance Professors:...

Hi I need answers immediately. Attached is a file. I need the detailed solutions (no excel, can be typed or handwritten) to the long answer portions ONLY. Please read instructions for rounding rules....

Where in the product / production life cycle can the most effective interventions be made to reduce the ecological and social impacts of REEs? Should governments take a more active role in regulating...

Hello there, I am having a real hard time figuring out how to arrive at the gross plant & equipment amount for Exercise 4-9 part a Colgate's Average total life span of plant and equipment using their...

You are running a small business, with the following information. Please show what ratios you could create and what those ratios tell you about the business. Sales =R950,000 ; Profit = R205,000 ;...

How can inventory carrying cost be calculated for a specific product? What suggestions would you offer for determining the measure of product value to be used in this calculation?

The concept holds that consumers and businesses, I lett alone, will ordinarily not buy enough of the organuation's products or services. A production B selling c marketing D nollistic marketing

identify and critically analyze "pros and cons of using NPV as decision rule".

In the assembly shown, a vertical force P is applied at point E at rigid bar FE supported by steel rod DE connected to rigid bar CBD which is also supported by steel rod AB. Steel rods AB and DE have...

Create a 200 word summary on the Juvenile Justice System than and today. Describe The Juvenile system and provide a generalizable definition. Highlight the issues in the Juvenile system and why this...

Advanced: Comparison of methods of reapportioning service department costs Puerile Plastics Ltd consists of six departments: persomiel and administration, maintenance, stores, moulding, extrusion and...

Advanced: Reapportionment of service department costs and a discussion of how fully allocated costs can be useful Megalith Manufacturing divides its plant into two main production departments,...

Intermediate: Explanation of a product cost calculation In order to identify the costs incurred in carrying out a range of work to customer specification in its factory, a company has a job costing...