Fin 470 Exam 2 Study Guide Solutions
benefits of futures and forwards - Ans:-futures
- no counter party risk, standardized implies higher liquidity
forwards
- customized (date/amount)
costs of futures and forwards - Ans:-futures
- may not be exactly what you need (set date or amount)
- pay b...
E. none of the above - Ans:✔✔-E. none of the above
SELL OIL - want it to go down
start: 57,000
end: 55,500
profit of + $1,500
You use 10000 bushels a month but only enter 1 long contract at 370. If next month's spot price is 400,
what would your costs be without the future? With the future?
A. $40,000; $37,000
B. $40,000; $38,500
C. $37,000; $40,000
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