You are a consultant specialized in Finance and you must answer the following questions below:

 

A. Calculate your pre-tax rate of return (profit divided by investment) in each of these scenarios (show calculations):

 

Buy 1,000 shares of XYZ common stock at $50 and sell at $60 one year later.
 

B. Today, some airlines hedge jet fuel prices and some do not. In the following year, oil prices decline? The airlines that hedged jet fuel prices are worse off than those that did not hedge? Using a numerical example, show your understanding of hedging by explaining why they are worse off. Then, in no more than half-page explain if this situation is an argument against hedging?

Answer rating: 100% (QA)

A To calculate the pretax rate of return in this scenario we can use the following formula Rate of r... View the full answer