Thursday, January 2, 2020

Essay Solutions for Mcdonald Chapter 6 - 2832 Words

Chapter 6 Commodity Forwards and Futures Question 6.1. The spot price of a widget is $70.00. With a continuously compounded annual risk-free rate of 5%, we can calculate the annualized lease rates according to the formula: F0,T = S0 Ãâ€" e(r−Î ´l )Ãâ€"T ⇔ F0,T S0 = e(r−Î ´l )Ãâ€"T S0 = (r − ÃŽ ´l ) Ãâ€" T F0,T 1 ln T S0 ⇔ ln F0,T ⇔ ÃŽ ´l = r − Time to expiration Forward price Annualized lease rate 3 months $70.70 0.0101987 6 months $71.41 0.0101147 9 months $72.13 0.0100336 12 months $72.86 0.0099555 The lease rate is less than the risk-free interest rate. The forward curve is upward sloping, thus the prices of exercise 6.1. are an example of contango. Question 6.2. The spot price of oil is $32.00 per barrel. With a continuously compounded annual†¦show more content†¦It does not make sense to store pencils in equilibrium, because even if we have an active lease market for pencils, the lease rate is smaller than the risk-free interest rate. Lending money at ten percent is more proï ¬ table than lending pencils at ï ¬ ve percent. b) The equilibrium forward price is calculated according to our pricing formula: F0,T = S0 Ãâ€" e(r−Î ´l )Ãâ€"T = $0.20 Ãâ€" e(0.10−0.05)Ãâ€"1 = $0.20 Ãâ€" 1.05127 = $0.2103, which is the price given in the exercise. c) c1) Let us ï ¬ rst look at the different arbitr age strategies we can use in each case. Pencils can be sold short. We can engage in our usual reverse cash and carry arbitrage: Transaction Time 0 Time T = 1 Long forward 0 ST − F0,T Short-sell tailed pen- $0.19025 −ST cil position, @ 0.05 Lend short-sale −$0.19025 $0.2103 proceeds @ 0.1 Total 0 $0.2103 − F0,T For there to be no arbitrage, F0,T ≠¥ $0.2103 c2) Suppose pencils cannot be sold short. Then we have no ability to create the short position necessary to offset the pencil price risk from the long forward. Consequently, we are not able to ï ¬ nd a lower boundary for the pencil forward in this case. 81 Part 2 Forwards, Futures, and Swaps c3) Pencils can be loaned. We engage in a cash and carry arbitrage: Transaction Time 0 Short forward 0 Buy tailed pencil −$0.19025 position, lend @0.05 borrow @ 0.1 $0.19025 Total 0 Time T = 1 F0,T − ST ST −$0.2103 F0,T − $0.2103 For thereShow MoreRelatedSolutions For Families : Distressed Situations1551 Words   |  7 PagesSolutions for Families in Distressed Situations Caroline Aranda, Ashley Haver, Carlos Siao, Veronica Ortiz, Ronyel Calloway Communication 8 California State University, Fresno 16 November 2016 TOPIC: Solutions for Families in Distressed Situations SPECIFIC PURPOSE: (Caroline) INTRODUCTION: (Caroline) CENTRAL IDEA: (Caroline) PREVIEW: (Caroline) [Transition 1: BODY: How do families become in these distressed situations? (Ashley) A study by researchers at the University ofRead MoreAnimal, Vegetable, Miracle By Barbara Kingsolver1085 Words   |  5 PagesRhetoric in â€Å"Animal, Vegetable, Miracle† by Barbara Kingsolver The issues of Americas food industries have in fact been issues debated against for decades. From McDonalds serving â€Å"pink mush† for a chicken substitute, to grossly inhumane slaughter houses across the nation. The fact still remains -- we, as Americans, are nowhere near a healthy and stable food industry. Few people realize this, and those who do realize it, either choose an unhealthy lifestyle or choose to improve their currentRead MoreA Brief Note On District Health Boards And Southern Dhb1660 Words   |  7 Pagesfraud done against the board. Swann and his partner, Kerry Harford, and their other business associates had managed to swindle $16.9 million from the Health Board. Sonnford Solution that was formed by Harford was alleged by the Serious Fraud Office (SFO) that the company only acted as a front for their well-planned fraud (McDonald, 2009) had charged the company 198 invoices over the six years period for supposedly insurance-type services related to the provisions of IT licenses, services and supportRead MoreMarketing Strategy1138 Words   |  5 PagesChapter 1 Marketing in Today’s Economy Exercise 1.1 CarsDirect http://www.carsdirect.com 1. Explore the CarsDirect website, including pricing a vehicle of your choice. How successful is CarsDirect in reducing the hassles associated with buying an automobile? 2. Does the design of the CarsDirect website convey confidence and trust in the car buying process? How has CarsDirect answered consumers’ concerns over the lack of a human element in their marketspace? Exercise 1.2 DaytonaRead MoreQuestions on Operations Management1661 Words   |  7 Pagesï » ¿Chapter 1: Introduction to Operations Management Overview This chapter provides a definition of operations management. The role and importance of operations in an organization are described, along with operations decisions that are made. The differences between manufacturing and services are described. The history and current trends of operations management are discussed, including the impact of information systems. Finally, the interaction between operations and other business functionsRead MoreUse of Biodegradable and Non-Biodegradable Materials of Leading Fastfood Chains7924 Words   |  32 PagesChapter I THE PROBLEM AND ITS BACKGROUND Introduction The term fast food industry refers to companies operating as national or international chains with a number of identically operating outlets. The fast food industry is specialized in food products such as hamburgers, pizzas, chicken, or sandwiches. The growth of the fast food industry has reached a staggering number. If there are so many millions or even billions of hamburgers, or chicken nuggets, or French fries sold each year, then imagineRead MoreTiger Beer1938 Words   |  8 Pages | | |2 |Marketing planning |Chapter 14; | |FIRST TUTORIAL - IMPT to ATTEND | | |Beg |process - overview |Chapter 2 pp. | |Discuss assessment requirements grading criteria | Read MoreKentucky Fried Chicken And Mcdonald Essay1586 Words   |  7 PagesKentucky Fried Chicken and McDonald s have held a successful presence in the UK for many years, with both enjoying high levels of the brand recognition. They have been the global leading brands for more than three decades (Keynote, 2003). In the United Kingdom, the fast food market values 7.82 billion pounds every year under estimation and 20 pounds per month for per adult on average (Schroder, McEachern, 2006). Owing to stressful lifestyles, quick meals are attracting more people to focus on. ThisRead MoreStarbucks Strategic Plan5173 Words   |  21 PagesInternational. The industry is concentrated with the top 50 companies generating more than 70% of sales. The external environment factors include competitors, creditor s, customers, labor, and suppliers. Starbucks top three competitors in order are McDonald s Corporation, Nestlà © USA, Dunkin Brands, (Hoovers - Starbucks, 2011). Starbucks strives to give the Starbucks Experience to all customers, recognizing and responding to their unique preferences and needs (Starbucks Diversity, 2011, p. 1). TheyRead MoreWhat is Market Segmentation?1501 Words   |  7 Pagesmany stores in the world, so it might be have lots of different option of product in different country. I put up the USA and China as an example to talk about. In the USA, there are around 27 different taste tea but in China just got less than 6. And in the 6 types of tea three of it is Chinese tea. Moreover, if the mid- autumn festival coming soon they will promote moon cake which I think is just in China have this. In order to cater to the tastes of Chinese consumers, Starbucks have promoted White

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.