30.TLW Mines expects to export 10,000 ounces of gold in the next two months. However, the price of gold is volatile, and management of the mine fear that the price may drop below the current $1,200 per ounce. Management is planning to protect the firms expected cash flow against volatility in the gold price.

Required:

Considering the firms situation, would you recommend a put option or a call option to management? Explain.

ii. The discount rate on this weeks 91-day Treasury bill is 23.4558%. Your mum wants to buy this bill with face value of GHS12,000. Required:

(a) Compute the price she will pay for the bill.

(b) Compute the interest rate she will earn over the investment period.

(c) Express the interest rate she will earn as an annual simple interest rate.

(d) Express the interest rate she will earn as an annual compound interest rate.