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A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells for $1.000 an ounce, but the price is extremely volatile and
A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells for $1.000 an ounce, but the price is extremely volatile and could fall as low as $920 or rise as high as 51,080 in the next month. The company will bring 1,000 ounces to the market next month. (Enter your answers in millions rounded to 2 decimal places.) a. What will be total revenues if the firm remains unhedged for gold prices of $920, $1,000, and $1,080 an ounce? Total Revenue Gold Price per Ounce $ 9201 $ 1,000 $ 1,080 million million million b. The futures price of gold for delivery one month ahead is $1,302. What will be the fim's total revenues at each gold price if the fim enters into a one-month futures contract to deliver 1,000 ounces of gold? Total Revenue Gold Price per Ounce $ 920 1,000 $ 1,080 million million million c. What will total revenues be if the firm buys one-month put option to sell gold for $1,000 an ounce? The put option costs $118 per ounce. Total Revenue Gold Price per Ounce $ 920 $ 1,000 $ 1,080 million million million
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