Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 15, 2023

The gold futures with delivery date on 25 May 2022 is priced at $1955.8. The gold futures with delivery date on 28 December 2022 is

The gold futures with delivery date on 25 May 2022 is priced at $1955.8. The gold futures with delivery date on 28 December 2022 is priced at $1977.8. The risk free rate is 1.0% per annum, and the convenience yield is 0. Assume 365 days in a year.

Required:

Compute the spot price and cost of carry of gold according to the cost of carry model.

Step by Step Solution

★★★★★

3.57 Rating (154 Votes )

There are 3 Steps involved in it

Step: 1

According to the cost of carry model the spot price of gold can be calculated using the formula Spot ... 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

Financial Reporting and Analysis

Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon

6th edition

9780077632182, 78025672, 77632184, 978-0078025679

More Books

Students also viewed these Finance questions

Question

★★★★★

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

Answered: 1 week ago

Question

★★★★★

On 12 June 2019, Citibank has purchased 220 units of 5.50% p.a. 15-year Exchange Fund Note (EFN) from HSBC. The purchase price of the EFNs is 118.33. The last interest payment was on 29 March 2019,...

Answered: 1 week ago

Question

★★★★★

ANGLO-GOLD ASHANTI issues 90-day commercial paper with par value of GHS10,000,000. It expects to sell the commercial paper for GHS 9,600,000. What is the yield of this commercial paper? Banks assets...

Answered: 1 week ago

Question

★★★★★

Ratio Computation and Analysis; Liquidity) as loan analyst for Madison Bank, you have been presented the following information. Each of these companies has requested a loan of $50,000 for 6 months...

Answered: 1 week ago

Question

★★★★★

Why should a foreign marketer be concerned with the study of culture?

Answered: 1 week ago

Question

★★★★★

Define entrepreneur and intrapreneur. What are the key differences between the two professionals?

Answered: 1 week ago

Question

★★★★★

10. Suppose X and Y are independent continuous random variables. Show that E[X|Y = y] = E[X] for all y

Answered: 1 week ago

Question

★★★★★

The following is accounting information taken from Woodrail Company's adjusted trial balance for 2016: In addition, the following changes occurred in selected accounts during 2016: Required: Using...

Answered: 1 week ago

Question

★★★★★

QUESTION 32 Why do people choose alternative dispute resolution over going to court? Explain. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)

Answered: 1 week ago

Question

★★★★★

TipTop Flight School offers flying lessons at a small municipal airport. The school's owner and manager has been attempting to evaluate performance and control costs using a variance report that...

Answered: 1 week ago

Question

★★★★★

14 Assume a company's activity-based costing system includes three activities with the following activity rates: Activity Cost Pool Travel Deliveries Customer service Activity Rate $2 per mile driven...

Answered: 1 week ago

Question

★★★★★

Problems 1.On 8.23.17, the night before the Powerball lottery results were announced, a man posted ( and then deleted) the following Tweet: "If I win, 10 people who RT this tweet will get $1,000,000...

Answered: 1 week ago

Question

★★★★★

Abigail has three children - Ben who is a toddler aged 2, Marie who is aged 8, and a 15 year old named Josh. Abigail lives in a deteriorating two bedroom apartment in a crime ridden part of town. She...

Answered: 1 week ago

Question

★★★★★

As part of its internal analysis, an HR manager at a consumer products firm is asked to prepare a forecast for the supply of product managers over the next year. Which of these techniques would...

Answered: 1 week ago

Question

★★★★★

Huntington Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California. In fabrication, machine setup costs are driven by the number of setups, machine...

Answered: 1 week ago

Question

★★★★★

Mary Ann bought a new computer for $2,000 and financed the entire purchase price at a nominal rate of interest payable 12 times per year at 9% per annum. She repaid her loan in 4 years with 48 equal...

Answered: 1 week ago

Question

★★★★★

Wardell Company purchased a mini computer on January 1, 2016, at a cost of $31,500. The computer has been depreciated using the straight-line method over an estimated five-year useful life with an...

Answered: 1 week ago

Question

★★★★★

The Home Depot is the leading retailer in the home improvement industry and one of the 10largest retailers in the United States. The company included the following on its January 29, 2012, balance...

Answered: 1 week ago

Question

★★★★★

MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 2014 and was completed in 2015. Information relating to the contract follows: Required:...

Answered: 1 week ago

Question

★★★★★

The stockholders equity section of Peter Corporations balance sheet at December 31, 2014, follows: Common stock ($10 par value); authorized 1,000,000 shares, issued and outstanding 900,000 shares $...

Answered: 1 week ago

Question

★★★★★

Electronic Arts develops, markets, publishes, and distributes interactive software games. The lease commitments section of the Commitments and Contingencies note from the companys annual report for...

Answered: 1 week ago

Question

★★★★★

For each of the following pairs of hypotheses, determine whether each pair represents valid hypotheses for a hypothesis test. Explain reasons for any pair that is indicated to be invalid. a. H0: =...

Answered: 1 week ago

Question

★★★★★

The Consumer Expenditures report released by the U.S. Bureau of Labor Statistics found the average annual household spending on food at home was $3,624. Suppose a random sample of 137 households in...

Answered: 1 week ago

Question

★★★★★

The makers of Mini-Oats Cereal have an automated packaging machine that can be set at any targeted fill level between 12 and 32 ounces. Every box of cereal is not expected to contain exactly the...

Answered: 1 week ago

Previous Question Next Question