Introduction To Investment Assignment 2

Chapter 1

  1. 12

The mining company might use future markets for hedging by estimating the amount of production monthly. The mining company will sell contracts to determine a price for gold.

  1. 20

The trader will gain 60,000 yen or lose 110,000 yen if the exchange rate at the end of the contract is 0.0074 per yen or 0.0091.

Chapter 2

  1. 11

For the amount of $2,000 to be withdrawn from the margin account the price per pound must be 126.67.

  1. 16

Collateral requirements will increase in the OTC market as a result of new regulations introduced since the 2008 credit crisis because they have initial and variation margin requirements alike to the exchange. The increase of collateral requirements will offset the increase in ways.

 

Chapter 3

  1. 18

The investor will need 26 contracts to hedge the market risk.

  1. 21

The expected returns on an investment of the following betas are:

  1. 6.40%
  2. 8.50%
  3. 14.80%