Use the following data for the next problems. Corn contracts are 5,000 bushels per contract, and the quote is dollars per bushel. Gold contracts are 100 ounces per contract, and the quote is in dollars per ounce.

Settlement	Spot	Dec16	Mar17	May17	Jul17	Sept17
Corn	3.43	3.32	3.43	3.50	3.58	3.66
Gold	1167.45	1166.8	1172.3	1176.1	1179.4	1180.6

For each commodity draw the forward curve.

Suppose that you are a farmer who wants to sell 15,000 bushels of corn in September 2017. Draw your exposure to spot corn, and describe what contract you would enter to eliminate your exposure to spot corn in September. If spot corn is trading for 3.25 in September, what is the profit/loss on your futures position? What is your profit/loss on the corn?

Suppose that you are a jeweler who wants to buy 1,000 oz of gold in March 2017. Draw your exposure to spot gold, and describe what contract you would enter to eliminate your exposure to spot gold in September. If spot gold is trading for 1,100 in March, what is the profit/loss on your futures position? What is your profit/loss on the gold?

The spot price of gold on December 1st is $1,170. Construct a forward curve for the next six months (Dec, Jan, Feb, Mar, Apr, May) assuming that carry arbitrage is possible. The current risk free rate is 2% and the cost of carrying is 2.

Rocket Co. just paid a dividend of $2.18. You anticipate that Rocket Co. will grow at a rate of 9% over the next 10 years due to the demand for their solid and liquid rocket boosters used by the Kerbal Space Program. Beginning 11 years from now, you anticipate the that public interest in the space program will fall and the growth of Rocket Co. will slow down to the average growth rate of the Kermin economy, which is 3%. The current risk free rate in the Kermin economy is 5%, the market risk premium is 6%, and the Beta of Rocket Co. is 1.2. Using the CAPM model and the discounted cash flow approach to valuation to value Rocket Co.

You are working at a private bank that is considering an IPO. You have pulled financial data on some of your competitors and you want to estimate the value of your firm using the market comparable approach to valuation using the Price to Earnings (Ind. Avg = 15), Price to Sales (Ind Avg = 5), and Price to Book Value of Equity (Ind Avg = 10) ratios. This year your bank had a net income of $2.9B, sales revenue of $8.6B, and book value of equity of $3B.