Questions from Business Statistics

Q: You plan to buy 1,000 shares of Swiss International Airlines

You plan to buy 1,000 shares of Swiss International Airlines stock. The current price is SF950. The current exchange rate is $0.7254/SF. You are interested in speculating on the stock but do not want...

Q: Recall from the chapters on options that we learned about bull and

Recall from the chapters on options that we learned about bull and bear spreads. Intermarket futures spreads also are considered bull and bear spreads. Describe what you think might be a bull spread w...

Q: Suppose you are a dealer in sugar. It is September 26

Suppose you are a dealer in sugar. It is September 26, and you hold 112,000 pounds of sugar worth $0.0479 per pound. The price of a futures contract expiring in January is $0.0550 per pound. Each cont...

Q: a. Define the minimum variance hedge ratio and the measure of

a. Define the minimum variance hedge ratio and the measure of hedging effectiveness. What do these two values tell you? b. What is the price sensitivity hedge ratio? How are the price sensitivity an...

Q: Explain how to determine whether to buy or sell futures when hedging

Explain how to determine whether to buy or sell futures when hedging.

Q: For each of the following situations, determine whether a long or

For each of the following situations, determine whether a long or short hedge is appropriate. Justify your answers. a. A firm anticipates issuing stock in three months. b. An investor plans to buy a...

Q: On March 16, the March Treasury bond futures settlement price was

On March 16, the March Treasury bond futures settlement price was 101 21/32. Assume that the 12 1/2 percent bond maturing in about 22 years is the cheapest bond to deliver. The CF is 1.4639. Assume th...

Q: Use the information in problem 16 to construct a euro covered call

Use the information in problem 16 to construct a euro covered call. Assume that the spot rate at the start is $0.9825.

Q: On June 17 of a particular year, an American watch dealer

On June 17 of a particular year, an American watch dealer decided to import 100,000 Swiss watches. Each watch costs SF225. The dealer would like to hedge against a change in the dollar/Swiss franc exc...

Q: On January 2 of a particular year, an American firm decided

On January 2 of a particular year, an American firm decided to close out its account at a Canadian bank on February 28. The firm is expected to have 5 million Canadian dollars in the account at the ti...