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PLEASE ANSWER ALL QUESTIONS. THANK YOU. 2) Pacific Ethanol is the leading producer and marketer of low-carbon renewable fuels and high-quality alcohol products in the
PLEASE ANSWER ALL QUESTIONS. THANK YOU.
2) Pacific Ethanol is the leading producer and marketer of low-carbon renewable fuels and high-quality alcohol products in the United States. During the current COVID-19 pandemic, demand for gasoline has plummeted, taking the demand for ethanol with it. Prices have dropped dangerously close to the cost of production. Pacific Ethanol wishes to protect itself from further price drops. Should they take a short or a long position in ethanol futures? 3) Suppose you just went long 4 gold futures contracts, established at an initial settle price of $2,056 per ounce. Each contract represents 100 troy ounces. The initial margin to establish the position is $10,000 per contract, and the maintenance margin is $8,000 per contract. Suppose, too, that over the next four trading days, gold settles at $2,010, $2,002, 2,040, and $2,075, respectively. Compute the balances on your futures position and on your margin account at the end of the day you enter the position and on each of the subsequent four trading days. Clearly identify the days you would have received a margin call and the amount of each margin call. In addition, compute your total profit or loss at the end of the trading period. Assume that a margin call requires you to restore your margin account to its initial requirement. 5) Stock in Cheezx-Poofs Manufacturing is currently priced at $33 per share. A call option with a $35.50 strike and 90 days to maturity is quoted at $1.15. Compare the percentage gains or losses from a $10,000 investment in the stock versus a $10,000 investment in the options (e.g., $10,000 worth of options) if, in 90 days, the stock price is $25; if the stock price is $35; and if the stock price is $45Step by Step Solution
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