Question
Problem 14.1a-14.2b - FUTURES & FORWARDS Volume per Contract Units Price Cotton Dec 50,000 cents per lbs 62.7900 Cotton Mar 17 50,000 cents per lbs
| Problem 14.1a-14.2b - FUTURES & FORWARDS | |||
| Volume per Contract | Units | Price | |
| Cotton Dec | 50,000 | cents per lbs | 62.7900 |
| Cotton Mar 17 | 50,000 | cents per lbs | 61.9100 |
| Sell in millions by March 2017= | 4,000,000 | ||
| Standard Deviation of Spot price = | 4.000% | ||
| Standard Deviation of Future price = | 3.500% | ||
| Correlation= | 0.80x | ||
| Optimum Ratio for 100% | XXX | ||
| Optimized | XXX | ||
| Optimized Ratio adjusted | XXX | ||
| Total Contracts | XXX | ||
| Optimum number of contracts (rounded) | XXX | ||
| Transaction on Delivery/Expiration Day | Cotton Prices | ||
| Increase/Decrease in Spot Prices | $0.05 | $0.00 | -$0.10 |
| Scenarios - Spot Prices | $0.67 | $0.62 | $0.52 |
| Cost from cotton sales | 2,511,600 | 2,476,400 | 2,076,400 |
| + Profit/Loss form Forward Contract | XXX | XXX | XXX |
| Net Payment for the European Goods | XXX | XXX | XXX |
Provide formulas/answers for the blank cells (where it is marked XXX) (ex. Optimum Ratio for 100%, Total Contracts, Cost from cotton sales, + Profit/Loss from forward contract, etc.). There are a total of 14 cells that need to be answered.
Answer and provide formulas for all of the empty cells.
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Financial Management Core Concepts
Authors: Raymond Brooks
4th Edition
134730417, 134730410, 978-0134730417
