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Marina86 [1]
4 years ago
14

A baker is interested in buying 5000 bushels of wheat on September 2020. He has a target price of $3.15/bushel and wants to hedg

e against upward price movements. There are no wheat futures contracts with maturity in September, but there are wheat futures with maturity in November. The size of one wheat futures contract with maturity in November is 1000 bushels. What should be the baker’s strategy to hedge against upward price movements?
Business
1 answer:
Alborosie4 years ago
3 0

Answer:

Long 5 November fates for wheat today, counterbalance position on September 2020, purchase wheat in the spot showcase in September 2020.

Explanation:

The risk included is upward development in the value, the helpful situation in prospects would be taking long position. Since, the fates are accessible for November month, take long situation on November and balance the situation in September by taking short situation for November month and purchase the wheat in the spot market.  

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Covered interest arbitrage involves both Group of answer choices the purchase of a domestic asset and a spot contract in the mar
shepuryov [24]

Answer:

the purchase of a foreign asset and a forward contract in the market for foreign exchange.

Explanation:

An arbitrage is a type of trade that is caused as a result of market inefficiency.

For example, if a stock is trading at $50 on the London Stock Exchange (LSE) while it is trading for $52 on the New York Stock Exchange (NYSE) at the same time. Philip buys the stock on the LSE and sells the same shares immediately on the NYSE and earns a profit of $2 per share, this is referred to as an arbitrage.

This ultimately implies that, arbitrage allows an individual to profit from the price difference between similar goods, commodity, securities or currency in different markets.

A covered interest arbitrage can be defined as trading strategy in which an investor minimizes his or her currency risk by using a forward contract to hedge against the interest rate difference between two countries i.e the exchange rate risk. Thus, it's considered to be the most common interest rate arbitrage around the world.

Hence, a covered interest arbitrage involves both the purchase of a foreign asset and a forward contract in the market for foreign exchange.

7 0
3 years ago
If the individual who has personally established a brokerage relationship with a buyer or seller is unavailable to attend a clos
loris [4]

Answer:dydtdgdg

Explanation:

7 0
3 years ago
Sales to customers who use bank credit cards such as mastercard and visa are usually recorded by:a. Debit to Cash and a credit t
algol13

Answer:

c. Debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales

Explanation:

The journal entry is shown below:

Bank credit card sales A/c Dr XXXXX

Credit card expense A/c Dr XXXXX

       To Sales A/c XXXXX

(Being the sales is recorded via bank credit cards)

As the credit card has some expense so we debited the credit card expense along with the bank credit card sales and credited the sales as it is revenue which is to be credited

4 0
4 years ago
Which of the following would tend to reduce effective capacity? a greater variety in the product line b suppliers that provide m
Nataly_w [17]

Answer:

a. a greater variety in the product line

Explanation:

"Effective capacity" refers to the <em>maximum possible output </em>in relation to a <em>given product variety, difficulties with schedules, quality factors and so on. </em>

Letter a, <u>"greater variety in the product line,"</u> will reduce effective capacity because <em>the more varieties of goods there are</em>, <em>the more complex </em>the process in producing the output will be. This will then lower the output being produced compared to a smaller variety of goods.

Letter b, <u>"suppliers that provide more reliable delivery performance"</u> will <em>increase the effective capacity </em>because the delivery of items or products are on time, so this will result to increase output.

Letter c,<u> "reduce changeover times"</u> will <em>increase the effective capacity.</em> <em>"Change over time"</em> refers to the time it takes from the last part of the product run to the first part of the product run. If time of the cycle will be shortened, then, it can produce more output.

Letter d,<em> </em><u><em>"improved production quality" </em></u>will<em> increase the effective capacity.</em> This means that quality improvement will prevent products from being returned, thereby speeding the process.

Letter e,<em> </em><u><em>"more employee cross-training"</em></u><em> </em>will increase the effective capacity. Employees will be able to do many kinds of work, thereby <em>hastening the process</em> and producing more outputs.

3 0
3 years ago
What is dumping?
Alborosie

Answer:

D. Dumping is exporting goods at prices that are lower than their value

Explanation:

Dumping in international trade occurs when a company or country exports goods to another at a cheaper place than it sells in its domestic market.  Dumping involves the export of a large number of products to gain a substantial market share in foreign markets.

Although dumping is not illegal, it may stifle the development of local industries. Domestic producers, especially infant-industries, cannot compete favorably with low-priced dumped products. Countries apply protective measures such as import tariffs and quotas to guide against dumping.

6 0
4 years ago
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