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tankabanditka [31]
3 years ago
6

A "three against nine" FRA has an agreement rate of 4.75 percent. You believe six-month LIBOR in three months will be 5.125 perc

ent. You decide to take a speculative position in a FRA with a $1,000,000 notional value. There are 183 days in the FRA period. Determine whether you should buy or sell the FRA and what your expected profit will be if your forecast is correct about the sixmonth LIBOR rate.
Business
1 answer:
Stella [2.4K]3 years ago
3 0

Answer:

Yes you should buy the FRA

Expected Profit = $1,858

Explanation:

Since the agreement rate is less than your forecast, you should buy a FRA.

Hence, If your forecast is  correct your expected profit will be:

$1,000,000 x [(0.05125-0.0475) x 183/360] / [1 + (0.05125 x 183/360)]

= $1,000,000 x [.001906/(1.026052)]

= $1,857.61.

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Answer:

C.$16 of overhead cost should be assigned to each wooden gazebo and

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single manufacturing overhead: 52,000 / 13,000 = $4 per labor hours

wooden gazebos:  4hours x $4 = $ 16

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8 0
3 years ago
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On December 31, 2019, Coolwear, Inc. had a balance in its supplies account of $48,400. During 2020, $86,000 was paid for new sup
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Answer:

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Therefore,

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