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abruzzese [7]
3 years ago
7

Suppose that the standard deviation of monthly changes in the spot price of commodity A is $20. The standard deviation of monthl

y changes in a futures price for a contract on commodity B (which is similar to commodity A) is $24. The correlation between the futures price change and the commodity spot price change is 0.95. What hedge ratio should be used when using the futures contract on commodity B to hedge an exposure to a decrease in the price of commodity A?
Business
1 answer:
shutvik [7]3 years ago
8 0

Answer:

The answer is 0.79166

Explanation:

The hedge ratio is given by correlation * spot A stddev / future A stddev  

The optimal hedge ratio is 0.95×($20/$24) = 0.79166

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Great Harvest Bakery purchased bread ovens from New Morning Bakery. New Morning Bakery was closing its bakery business and sold
ddd [48]

Answer:

Particulars                                  Amount

Purchase price                         $700,000

Add: Freight cost                     $35,000

Add: Electrical connections    $5,000

Add: Labor costs                      $37,800

Add: Bred dough used            $900

Add: Safety guards                  <u>$1,500</u>

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<u></u>

Note: Repairs cost of $5,000 will not be included

5 0
3 years ago
The price system is an important component of the market because it
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6 0
3 years ago
The account balances of Sentinel Travel Service for the year ended August 31, 2019, are listed below:
Yanka [14]

Answer:

Explanation:

The preparation of the report form balance sheet as of August 31, 2019 is presented below:

                                      Sentinel Travel Service

                                 Report form balance sheet

                              For the year ended August 31, 2019

Assets

Cash                                             $143,125

Account receivable                     $54,240

Supplies                                       $9,300      

Land                                             $248,000

Total assets                                 $454,665

Liabilities

Account payable                        $19,370

Owner equity

Ending capital                            $435,295

Total liabilities

And owners equity                    $454,665

The net income would be

= Fees earned - Office expense - Miscellaneous expense - Wages expense

= $774,800 - $178,205- $15,495 - $371,905

= $209,195

And, the ending capital would be

= Opening capital - withdrawn amount + net income - additional cpiatl

= $209,000 - $29,400 + $209,195 + $46,500

= $435,295

7 0
3 years ago
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