Questions from General Investment

Q: You are considering purchasing a bond that pays annual interest of $

You are considering purchasing a bond that pays annual interest of $50 per $1,000 of par value. The bond matures in one year, and at that time you will collect the par value and the interest payment....

Q: A six-month call option contract on 100 shares of Home

A six-month call option contract on 100 shares of Home Depot common stock with a strike price of $60 can be purchased for $600. Assuming that the market price of Home Depot stock rises to $75 per shar...

Q: Suppose that a call option with a strike price of $45

Suppose that a call option with a strike price of $45 expires in one year and has a current market price of $5.16. The market price of the underlying stock is $46.21, and the risk-free rate is 1%. Use...

Q: You believe that oil prices will be rising more than expected and

You believe that oil prices will be rising more than expected and that rising prices will result in lower earnings for industrial companies that use a lot of petroleum-related products in their operat...

Q: Josh Rink considers himself a shrewd commodities investor. Not long ago

Josh Rink considers himself a shrewd commodities investor. Not long ago he bought one July cotton contract at $0.54 a pound and he recently sold it at $0.58 a pound. How much profit did he make? What...

Q: A quote for a futures contract for British pounds is 1.

A quote for a futures contract for British pounds is 1.6683. The contract size for British pounds is 62,500. What is the dollar equivalent of this contract?

Q: You have purchased a futures contract for euros. The contract is

You have purchased a futures contract for euros. The contract is for 125,000 euros and the quote was 1.1636. On the delivery date, the exchange quote is 1.1050. Assuming you took delivery of the euros...

Q: You just heard a news story about mad cow disease in a

You just heard a news story about mad cow disease in a neighboring country, and you believe that feeder cattle prices will rise dramatically in the next few months as buyers of cattle shift to U.S. su...

Q: You decide to act on your hunches about feeder cattle, so

You decide to act on your hunches about feeder cattle, so you purchase four contracts for April delivery at 88.8. You are required to put down 10%. How much equity/capital did you need to make this tr...

Q: As it turns out, you were correct when you purchased four

As it turns out, you were correct when you purchased four contracts for feeder cattle at 88.8, as the spot price on cattle rose to 101.2 on the delivery date given in your contracts. How much money di...