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Agata [3.3K]
3 years ago
15

"The spot price of the market index is $900. A 3-month forward contract on this index is priced at $930. What is the profit or l

oss to a short position if the spot price of the market index rises to $920 by the expiration date"
Business
1 answer:
Mademuasel [1]3 years ago
8 0

Answer:

$10 profit

Explanation:

In this question, we are asked to calculate the profit or loss to a short position.

Firstly, we identify that the spot price of market index is $900.

Now, a three months forward contract equals a value of $930.

Raising the index to $920 at the expiry date is obviously a profit to the short position.

To calculate the profit here, we simply subtract the index at expiry date from the three months forward contract.

Mathematically, this is equal to $930-$920 = $10 profit

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Collaborative relationship

Explanation:

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7 0
3 years ago
On January 1, Alan King decided to transfer an amount from his checking account into an investment account that later will provi
const2013 [10]

Answer:

The requirement of the question is as below:

How much must Alan deposit on January 1? (Round your final answer to the nearest whole dollar amount.)  

What is the interest for the four years? (Round your final answer to the nearest whole dollar amount.)

Alan deposit on January 1 is $ 58,802.39  

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Explanation:

The first is asking for today's worth of the investment,which is the amount to be invested,this can be computed using the present value as shown below:

PV=FV*(1+r)^-n

PV is the present value

FV is the worth of the investment in 4 years from now which is $80,000

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n is the number of years of investment which is 4 years

PV=$80,000*(1+8%)^-4

PV=$80,0008(1+0.08)^-4

PV=$80,000*(1.08)^-4

PV =$ 58,802.39  

interest for four years=FV-PV

interest for four years=$80,000-$ 58,802.39  

                                    =$21,197.61

4 0
3 years ago
One reason a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so: a. sugg
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a. The owner invested $18,000 cash in the company in exchange for its common stock. b. The company purchased supplies for $1,250
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Answer:

since there is not enough room here I used an excel spreadsheet

Explanation:

Download pdf
6 0
3 years ago
Choose as many answers as apply.
finlep [7]
2, 3, and 4, make the most sense to me. I'm not completely sure about 4, but I'm confident about the other two :)
8 0
4 years ago
Read 2 more answers
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