You entered into a short position on 10,514 of copper at $6.76 per pound. The initial...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You entered into a short position on 10,514 of copper at $6.76 per pound. The initial margin for this contract is $100,000. Suppose the futures price today is $8.71. How much is in your margin account? Question 4 1 pts The city you work for is worried about overtime for snowplow drivers if there is a really large snowstorm. You estimate that the city will spend $1,000 in overtime for every inch of snow above 12 inches. You suggest buying parametric insurance to hedge this risk. The policy states that the insurance company will pay $1,527 for every inch of snow above 24 inches. Next year, the total snow amount is 47. What is your city's hedged position? You entered into a short position on 10,514 of copper at $6.76 per pound. The initial margin for this contract is $100,000. Suppose the futures price today is $8.71. How much is in your margin account? Question 4 1 pts The city you work for is worried about overtime for snowplow drivers if there is a really large snowstorm. You estimate that the city will spend $1,000 in overtime for every inch of snow above 12 inches. You suggest buying parametric insurance to hedge this risk. The policy states that the insurance company will pay $1,527 for every inch of snow above 24 inches. Next year, the total snow amount is 47. What is your city's hedged position?
Expert Answer:
Answer rating: 100% (QA)
1 To calculate the margin amount in your account you need to first calculate the change in the futur... View the full answer
Related Book For
Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown
Posted Date:
Students also viewed these finance questions
-
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...
-
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...
-
It is March 9, and you have just entered into a short position in a soybean meal futures contract. The contract expires on July 9 and calls for the delivery of 100 tons of soybean meal. Further,...
-
A process stream is heated using a shell and tube heat exchanger. The exit temperature is controlled by adjusting the steam control valve shown in figure. During an open-loop experimental test, the...
-
What factors can reduce comparability among financial statements?
-
On January 3, 2020, Ajax Argyle purchased a piece of equipment for $125,000. The equipments estimated useful life is either three years or 12,000 units, with a residual value of $18,000. The company...
-
How is social media depriving protected classes of their civil rights?
-
Techno Designs produces head covers for golf clubs. The company expects to generate a profit next year. It anticipates fixed manufacturing costs of $126,500 and fixed general and administrative...
-
Use the following case based on a real company to answer the questions. - SWOT Analysis for Global Tech. Please ensure that you analyze the main issues (as opposed to identifying and listing case...
-
Include a reflection to the client that discusses the tax recommendations and consequences of your newly chosen energy-friendly initiative. Specifically, you must address the following: Identify the...
-
Grand Berhad sign a lease agreement with Branded Berhad on 1 January 2015 to lease a drying machine. The lease term is non- cancellable lease for 5 years with bargain purchase option and the title of...
-
What is sudden load?
-
In a differential pulley block, the diameter of the smaller pulley is 9/10 th of the larger pulley. Find the load lifted by the block with an effort of 200 N if the efficiency is 45%.
-
Show that the competitive labor market compensates workers for the probability that they will be laid off.
-
Define creep. What are its stages?
-
What impact does the assignment of employees to the in-group or out-group (LMX) have on workers performance and satisfaction?
-
The Running Court Co. (RC) is a company that produces and sells running shoes. It costs RC $82 of variable costs and $50,000 of fixed costs to produce one pair of shoes normally sold for $122. What...
-
Can partitioned join be used for r r.A s? Explain your answer
-
What major factors must be considered when constructing a market index? Put another way, what characteristics differentiate indexes?
-
a. Explain what is meant by the term structure of interest rates. Explain the theoretical basis of an upward-sloping yield curve. b. Explain the economic circumstances under which you would expect to...
-
Assume that the rate of inflation during all these periods was 3 percent a year. Compute the real value of the two tax-deferred portfolios in problems 4a and 5a.
-
You work in the customer relations department of a company that makes plumbing supplies. The head of product development has just handed you the draft of installation instructions for a sliding tub...
-
Form small groups for this exercise on claim and adjustment letters. Have each member of your group study the following two letters. Meet and discuss your reactions to the two letters. How...
-
Study the excerpt from the Micron data flyer (2010, p. 9). Describe the designers use of alignment as a design principle. How effective is it? How would you modify it? Present your analysis and...
Study smarter with the SolutionInn App