A large dental lab plans to purchase 1,000 ounces of gold in 1 month. Assume again that
Question:
A large dental lab plans to purchase 1,000 ounces of gold in 1 month. Assume again that gold prices can be $1,330, $1,450, or $1,650 an ounce.
a. What will total expenses be if the firm purchases call options on 1,000 ounces of gold with an exercise price of $1,450 an ounce? The options cost $3 per ounce.
b. What will total expenses be if the firm purchases call options on 1,000 ounces of gold with an exercise price of $1,445 an ounce? These options cost $7 per ounce.
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Gold price 1330 1450 1650 a Cost of gold 1330000 1450000 1650000 Cost of call 3000 ...View the full answer
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Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9781259087585
6th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan, Gordon Roberts
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