1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Thepotemich [5.8K]
3 years ago
12

What should a trader do when the one-year forward price of an asset is too low? Assume that the asset provides no income. The tr

ader should borrow the price of the asset, buy one unit of the asset and enter into a long forward contract to buy the asset in one year. The trader should borrow the price of the asset, buy one unit of the asset and enter into a short forward contract to sell the asset in one year. The trader should short the asset, invest the proceeds of the short sale at the risk-free rate, enter into a short forward contract to sell the asset in one year The trader should short the asset, invest the proceeds of the short sale at the risk-free rate, enter into a long forward contract to buy the asset in one year
Business
1 answer:
babunello [35]3 years ago
7 0

Answer:

The answer is "Choice D".

Explanation:

Please find the numbering of the choices in the attached file.

In this question, when this forward price is too low in comparison to both the location cost of production, the dealer must also reduce their assets throughout the spot market and purchase it at the potential price.  Its trader should reduce the asset, reinvest the owner-occupants profits on a risk-free basis, establish a long-term loan to buy the asset with one year.

You might be interested in
Which one of the following statements is correct concerning the payback rule?
Naya [18.7K]

The correct concerning the payback rule is rule is flawed because it ignores all cash flows after some arbitrary point in time.

Payback period in capital budgeting refers to the time required to recover funds spent on an investment or to reach breakeven. Example: If at the beginning of year 1 he invests $1,000 and at the end of year 1 and his second year he earns $500, it pays for itself within 2 years.

The number of years it will take to recover the money invested. For example, if it takes 5 years to recover the cost of an investment, the payback period is he 5 years.

Payback period is defined as the number of years required to recover the original cash investment. In other words, the period during which a machine, plant, or other investment has generated sufficient net income to cover its investment costs.

Learn more about Payback period brainly.com/question/23149718

#SPJ4

7 0
1 year ago
Where should you explain the factors that led you to submit an unsolicited proposal, such as conversations with members of the r
ira [324]

Solicited business proposals are executed in reaction to a purchaser's want, at the same time as unsolicited proposals are used to market it to capacity customers.

It is an internal suggestion due to the fact it's miles from a worker in the organization. And unsolicited due to the fact this is an idea that became an independent idea up and the employee now desires to endorse this idea to the top of the employer.

The advent of an unsolicited proposal consists of a statement of the hassle or opportunity that the concept addresses to reinforce the argument stated in the record.

Learn more about organization here: brainly.com/question/24448358

#SPJ4

5 0
1 year ago
What would you predict if you had first mixed the catalase (100%) in serial solutions of varying phs of 3, 5, 7, 9, 11? what wou
lana [24]
<span>The optium pH level would be an average of these pHs, which is 7. 7 is also the mean, but the solutions of varying pH would eventually neutralize to 7.</span>
5 0
3 years ago
The up and coming corporation's common stock has a beta of 1.05. if the risk-free rate is 5.3 percent and the expected return on
Ugo [173]

Cost of equity is calculated as -

Cost of equity = Risk free return + Beta * (Market risk - Risk free return)

Given,

Risk free return = 5.3 %

Market risk = 12 %

Beta = 1.05

Cost of equity = 5.3 % + (1.05*(12-5.3%))

Cost of equity = 12.335 % or 12.24 %

6 0
3 years ago
Heidebrecht Design acquired 20% of the outstanding common stock of Quayle Company on January 1, 2014, by paying $800,000 for the
DedPeter [7]

Answer:

Detailed step wise solution is given below:

4 0
3 years ago
Other questions:
  • Swan Song is a spa that caters to the needs of a small percentage of highly health-conscious consumers. It offers state-of-the-a
    14·1 answer
  • What's the future value of a 12%, 5-year ordinary annuity that pays $800 each year? Round your answer to the nearest cent. $ If
    6·1 answer
  • Ashley and Benjamin are the sole owners of Super Corporation. Ashley owns 40% of the stock and Benjamin owns 60%. Several years
    13·1 answer
  • Which form does RESPA require lenders to use to detail the costs that the buyer and seller will pay at closing?
    11·1 answer
  • Consider the following bond quote: a municipal bond quoted at 101.25. If the municipal bond has a par value of $5,000, what is t
    9·1 answer
  • Which of the following groups is characterized by a strong belief in the literal truth of the Bible, a very strong commitment to
    5·1 answer
  • Hines Cosmetic Co. sold beauty preparations nationally to beauty shops at a standard or fixed- price schedule. Some of the shops
    10·1 answer
  • Marginal utility is the change in total utility obtained by consuming one more unit of a good. B) change in total utility obtain
    5·1 answer
  • Why can you win a presidential election without winning the most individual votes?
    13·2 answers
  • Marigold Corp. purchased machinery for $1232000 on January 1, 2017. Straight-line depreciation has been recorded based on a $860
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!