1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ksju [112]
3 years ago
6

A company has a $20 million portfolio with a beta of 1.2. It would like to use futures contracts on a stock index to hedge its r

isk. The index futures price is currently standing at 1080, and each contract is for delivery of $250 times the index. What is the hedge that minimizes risk
Business
1 answer:
11111nata11111 [884]3 years ago
7 0

Answer: 88.89 or 89

Explanation: Futures contract refers to a legal binding which obligates a buyer and seller to transact about a commodity, good, security or services at a predetermined price but goods are delivered or paid for in the future.

Given the following ;

Portfolio value(p) = $20million

Portfolio Beta (b) = 1.2

Index price (i) = 1080

Multiplier = 250

Future value(A) = index price × multiplier

Future value(A) = 1080 × 250 = 270000

Number of contracts (N) = (portfolio value × portfolio Beta) ÷ future value

N = ($20,000,000×1.2)÷270000

N = 24000000 ÷×270000

N = 88.8888=88.89

N = 89 (NEAREST whole number)

You might be interested in
Janet and Megan are debating the use of student discounts by local stores near school. Janet argues, "When stores offer discount
Ilya [14]

Answer:

Antonio

Explanation:

In simple words, Antonio has a lot of support among economists. Price discrimination occurs when a vendor is able to split clients into groupings or segregate a marketplace into two categories so that they may charge varying charges to that same two groups. It has hardly anything to deal with the customers' age.

Thus, Antonio is correct with his views.

7 0
3 years ago
Rad, a manufacturer of luxury watches, charges a higher price for its products than its competitors. Despite the high prices, th
rodikova [14]

Answer:

More-for-more

Explanation:

A value proposition refers to the value a company promises to deliver to customers if they decide to purchase their product. A value proposition is also a declaration of intent or a statement that introduces a company's brand to consumers by informing the customers what the company stands for, how it is being operated, and why it deserves their patronage.

8 0
3 years ago
Can u own your own business without your business lincence
solniwko [45]

Answer:

Yes

Explanation:

If a kid sells things daily to people to make profit then that kid would have a "business"

6 0
3 years ago
Read 2 more answers
List all the economic activities involved in each of the following businesses:
Bess [88]

Answer:

Selling cotton shirts at a high-street store:

Manufacture: First, the factory manufactures shirts using raw materials they’ve purchased from suppliers.

Quality control: The shirts go through quality control to check for defects and to ensure uniformity among all the shirts. Quality inspectors are paid to ensure that shirts are free of defects.

Packaging/transportation: After the quality control process, the factory packages the shirts and hires transportation services to transport the shirts to the retail outlet.  

Labeling: At a retail outlet, each type of shirt is valued and receives a price tag based on the discount that the storeowner decides to offer consumers.  

Selling: Consumers choose between many types of shirts and may decide to purchase the shirt based on the quality and price.

Selling hamburgers at a fast-food restaurant:

Buying the ingredients: Headquarters buy ingredients from meat suppliers.

Assembly process: A team of chefs starts the preparation by chopping and assembling all the ingredients. Another team of chefs makes the burgers, and the ingredients are ready for delivery. Chefs are paid to ensure burgers are prepared correctly and packaged to maximize shelf life.

Packaging: The packaging department packs the burger patties and hires a specialized transportation service to deliver the frozen patties to the restaurant.  

Selling: The restaurant prices the burgers and prepares them as customers order them. Customers can choose between this restaurant and another down the street.

Selling medicines at a drug store:

Manufacturing: A valid license holder manufactures the medicines. The manufacturer may hold the patent for certain drugs or may pay for the license to manufacture the drug.

Wholesalers: Wholesale dealers sell the medicines to pharmacies or other wholesalers.  

Selling: Pharmacies sell the medicines to consumers, who may have the choice to purchase other drugs, including generic drugs.

Selling gas at a gas station:

Production: The oil company has to drill underground to find oil. The operation is typically paid for by investors that hope to strike oil and sell the oil to a refinery.

Refining: The crude oil is then refined at a refinery, who purchases the oil from the drilling company.

Selling: The oil company sells the refined oil to gas stations, which sell the gas to consumers. Consumers have many choices for gasoline, so the market price is a buyers’ market.

Explanation:

Don't really need one lol, I literally got the answer from the problem since I have to do this too

5 0
3 years ago
Stockit, Inc. issued 100,000 shares of the 1,000,000 shares it is allowed to issue. Stockit has repurchased 10,000 of its own sh
Molodets [167]

Based on the number of shares that Stockit, Inc. were allowed to issue, the number of authorized shares is 1,000,000 shares.

<h3>What are authorized shares?</h3>

This refers to the maximum number of stock that a company is allowed to offer to the market/ investors.

In this case, Stockit Inc. were allowed to issue a maximum of 1,000,000 shares which means that this is the authorized share capital.

Find out more on authorized shares at brainly.com/question/26206078.

5 0
2 years ago
Other questions:
  • Match the following statements to the appropriate terms. An entry that involves three or more accounts. Transferring journal ent
    11·1 answer
  • Researchers have defined the marketing problem. what is the next step in the marketing research process? A. Interpret the data.
    5·2 answers
  • What types of information could you collect to monitor potential political “trouble spots” around the world?
    9·1 answer
  • Jones Corporation purchased merchandise inventory with a 10%, 120-day note payable for $10,000. The company uses the perpetual i
    14·1 answer
  • You own a local coffeeshop. recently, you noticed that customers were doodling on your white paper cups. intrigued, you set up a
    11·1 answer
  • When pooling variances, the resulting value will be closer to the variance for the sample with the smaller number of scores.​?
    8·2 answers
  • A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. In
    11·2 answers
  • During January, the solar cell factory begins 57,000 solar cells, and completes 53,000 of them. The remaining 4,000 solar cells
    14·1 answer
  • Is the state of matter with the highest temperature
    6·1 answer
  • Economies of scale give an advantage to what type of company? A. A company with a small number of employees B. A company that ma
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!