Well depression and deflation and recession are when prices go down. So it is not them. Inflation is when the price raises because of supply and demand. So the correct answer is Inflation.
Answer:
508,000 units
Explanation:
The computation of the number of finished goods produced is shown below:
Finished goods produced during the year = Closing inventory + sales - opening inventory
= 2,600 units + 506,000 units - 600 units
= 508,000 units
We simply added the closing inventory into sales and deducted the opening inventory so that the finished goods produced during the year could come
Answer:
The size of the futures position should be 64.2% of the size of the company’s exposure in a three-month hedge.
Explanation:
As given,
The standard deviation of quarterly changes in the prices of a commodity = $0.65
The standard deviation of quarterly changes in a futures price on the commodity = $0.81
The coefficient of correlation between the two changes = 0.8
Now,
Optimal hedge ratio = 0.8×
= 0.8×0.80 = 0.6419
⇒Optimal hedge = 0.6419 ≈ 0.642 = 64.2 %
⇒The size of the futures position should be 64.2% of the size of the company’s exposure in a three-month hedge.
Answer:
The answer is option (c)$89,301
Explanation:
Solution
Given that:
Inflation rate = 2%
The expected value of an investment = 82,500
Now,
nominal terminal value of the investment at the end of year 4.
Thus,
The nominal terminal value rate at the end of year four is given as follows:
= 82, 500 * (1 +2%) ^4
=$89300. 65
= $89,301
