Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Apr 17, 2023

Find the value of a swap contract where an oil refinery receives monthly the spot value of N barrels of oil during 12 months

Find the value of a swap contract where an oil refinery receives monthly the spot value of N barrels of oil during 12 months in return for a fixed payment of X per barrel. Assume there are no storage costs and the current value of a barrel of oil is So and the annual risk-free rate is r with discrete compounding.

Step by Step Solution

★★★★★

3.43 Rating (159 Votes )

There are 3 Steps involved in it

Step: 1

To find the value of the swap contract we need to calculate the present value of the cash flows from ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Microeconomics

Authors: Hal R. Varian

9th edition

978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968

More Books

Students also viewed these Finance questions

Question

★★★★★

Ques 1: What is the major complaint by firms concerning the Sarbanes-Oxley act of 2012? A. the legislative maximum allowable compensation for a CEO. B. the legal requirement to disclose project...

Answered: 1 week ago

Question

★★★★★

KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...

Answered: 1 week ago

Question

★★★★★

In Problem 10.16, we projected financial statements for Walmart Stores, Inc. (Walmart) for Years +1 through +5. The data in Exhibits 12.17-12.19 (pages 948-950) include the actual amounts for 2012...

Answered: 1 week ago

Question

★★★★★

For a corporation such as Bell Canada, what are the two primary advantages of equity financing? Ownership is spread among many individuals, and no interest payments are required. Investors pay top...

Answered: 1 week ago

Question

★★★★★

How can Kevins management project be his research project? Kevin found the discussion on insider action research in his part-time Masters Research methods module very revealing and stimulating. He...

Answered: 1 week ago

Question

★★★★★

In Problems 3646, solve each equation. Express irrational solutions in exact form. 5x = 3x+2

Answered: 1 week ago

Question

★★★★★

=+39. Hawaii tourism pre-crisis. Much of the public and private industry in Hawaii depends on tourism. The following time series plot shows the number of domestic visitors to Hawaii by air from the...

Answered: 1 week ago

Question

★★★★★

Miller Co., which produces and sells skiing equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $10,000,000 Preferred $1 stock, $10 par 10,000,000 Common stock, $25 par...

Answered: 1 week ago

Question

★★★★★

C++, coding on code:: Blocks Minilab Inheritance 1. As you do the steps, but sure to fill in the syour answer here> parts... Also, be sure to do them IN ORDER. 2. There is a class called Rectangle...

Answered: 1 week ago

Question

★★★★★

A produce company supplies organically grown apples to four regional specialty stores. After the apples are collected at the companys orchard, they are transported to any of three preparation centers...

Answered: 1 week ago

Question

★★★★★

The Gasson Company sells three products, Product A, Product B and Product C, and had sales of $1,200,000 during the month of June. The company's overall contribution margin ratio was 37% and fixed...

Answered: 1 week ago

Question

★★★★★

DHL, the international air express and logistics company, serves a wide range of customers, from global enterprises with sophisticated and high volume supply-chain solutions shipping anything from...

Answered: 1 week ago

Question

★★★★★

Many corporate takeovers involve the acquiring firm installing its own managers and slashing the payrolls of the acquired firm. Why has Tata chosen to retain the existing management teams of the...

Answered: 1 week ago

Question

★★★★★

a. What is the electric potential at points A, B, and C in Figure P21.16? b. What is the potential energy of an electron at each of these points? c. What are the potential differences \(\Delta...

Answered: 1 week ago

Question

★★★★★

Two identical converging lenses of focal length $100 \mathrm{~mm}$ are placed $400 \mathrm{~mm}$ apart, and an object $40 \mathrm{~mm}$ tall is placed $230 \mathrm{~mm}$ to the left of the...

Answered: 1 week ago

Question

★★★★★

A $200-\mathrm{Hz}$ power source in a series $R L C$ circuit applies an AC potential difference that has an amplitude of $60 \mathrm{~V}$. The current amplitude is $1.0 \mathrm{~A}$, and the...

Answered: 1 week ago

Question

★★★★★

Sheep Ranch Golf Academy is evaluating new golf practice equipment. The "Dimple-Max" equipment costs $125,000, has a 6-year life, and costs $9,600 per year to operate. The relevant discount rate is 9...

Answered: 1 week ago

Question

★★★★★

Baxter, Inc., owns 90 percent of Wisconsin, Inc., and 20 percent of Cleveland Company. Wisconsin, in turn, holds 60 percent of Clevelands outstanding stock. No excess amortization resulted from these...

Answered: 1 week ago

Question

★★★★★

Priscilla finds it optimal not to engage in trade at the going prices and just consumes her endowment. Priscilla has no kinks in her indifference curves, and she is endowed with positive amounts of...

Answered: 1 week ago

Question

★★★★★

The Miss Manners Refinery in Dry Rock, Oklahoma, converts crude oil into gasoline. It takes 1 barrel of crude oil to produce 1 barrel of gasoline. In addition to the cost of oil there are some other...

Answered: 1 week ago

Question

★★★★★

When prices are (4, 6), Goldie chooses the bundle (6, 6), and when prices are (6, 3), she chooses the bundle (10, 0). (a) On the graph below, show Goldies first budget line in red ink and her second...

Answered: 1 week ago

Question

★★★★★

An item that costs a store $152.50 is marked up by $47.45. Determine: a. The rate of markup on cost. b. The rate of markup on selling price.

Answered: 1 week ago

Question

★★★★★

Sutton Trucking made two equal payments, on June 25 and July 15, on an invoice for $6350 dated June 15 with terms 3/10, 1/30, n/60. The payments reduced the balance owed on the invoice to $1043.33....

Answered: 1 week ago

Question

★★★★★

Omega Restaurant buys Shiraz wine at $16.95 per bottle, and sells it to customers at $34.95 per bottle. Calculate Omegas rate of markup on cost and rate of markup on selling price of the wine.

Answered: 1 week ago

Previous Question Next Question