ABC Corp. mines copper, with ﬁxed costs of \$0.60/lb and variable cost of \$0.30/lb. The 1-year forward price of copper is \$1.10/lb

Description
1. Buy here: http://student.land/abc-corp-mines-copper-with-xed-cost s-of-0-60-lb-and-variable-cost-of-0-30-lb-the-1-year-forw ard-price-of-copper-is-1-10-lb/ ABC Corp.…

View again

All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Information
Category:

Jobs & Career

Publish on:

Views: 16 | Pages: 2

Share
Transcript
• 1. Buy here: http://student.land/abc-corp-mines-copper-with-xed-cost s-of-0-60-lb-and-variable-cost-of-0-30-lb-the-1-year-forw ard-price-of-copper-is-1-10-lb/ ABC Corp. mines copper, with xed costs of \$0.60/lb and variable cost of \$0.30/lb. The 1-year forward price of copper is \$1.10/lb. The 1-year effective annual interest rate is 6.2%. One-year option prices for copper are shown in the table below. Strike Call Put 0.9500 \$0.0649 \$0.0178 0.9750 0.0500 0.0265 1.0000 0.0376 0.0376 1.0250 0.0274 0.0509 1.0340 0.0243 0.0563 1.0500 0.0194 0.0665 In your answers, consider copper prices in 1 year of \$0.70, \$0.80, \$0.90, \$1.00, \$1.10, and \$1.20. 1. If ABC Corp. does nothing to manage copper price risk, what is its prot one year from now, per pound of copper? If on the other hand ABC Corp. sells forward its expected copper production, what is its estimated prot one year from now? Construct a table for the two scenarios. 2. Assume the 1-year copper forward price were \$0.90 instead of \$1.10. If ABC Corp. were to sell forward its expected copper production, what is its estimated prot one year from now? What if the forward copper price is \$0.60? Should ABC Corp. produce copper? Construct tables for the scenarios. 3. Using table, compute estimated prot in 1 year if ABC Corp. buys a put option with a strike of \$1.00.
• 2. 4. Using table, compute estimated prot in 1 year if ABC Corp. sells a call option with a strike of \$1.00. 5. Using table, compute estimated prot in 1 year if ABC Corp. buys collars with the following strikes: 1. \$0.95 for the put and \$1.00 for the call 2. \$0.975 for the put and \$1.025 for the call 3. \$1.05 for the put and \$1.05 for the call
• Related Search
Similar documents

(with Olessia Kirtchik) On (im)permeabilities: Social and human sciences on both sides of the ‘Iron Curtain’, History of the Human Sciences 29(4-5): 3-12.

View more...

A company is experiencing lower than expected sales. The company’s executives agreed that in order to make up some of the lost revenue’s impact on the bottom line

Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks