What is the spot rate for this stock if spot-futures parity exists?.
Southern Fields has an inventory of 838,000 pounds of sugar. The firm placed a partial hedge on this inventory by selling 6 futures contracts at 9.56. The futures contracts are based on 112,000 pounds and quoted in cents per pound. At the time the firm sold the sugar, the spot rate was 9.63. How much profit did the firm lose because of the hedge? (2 points)
2. The Shirt Factory purchased 10 futures contracts on cotton at a quoted price of 71.14 as a hedge against its inventory needs. At the time it actually needed the cotton, the spot price was 71.56. Cotton futures are based on 50,000 pounds and quoted in cents per pound. How much did the Shirt Factory save by hedging cotton? (2 points)
3. Will purchased 3 futures contracts on corn. The contract size is 5,000 bushels and the price is quoted in cents per bushel. Assume the initial margin requirement is 4.5 percent of the contract value. What is the amount of the initial margin if the futures quote is 624? (2 points)
4. The spot price for a non-dividend-paying stock is $24. The risk-free rate is 2.8 percent and the market rate is 10.6 percent. What is the 6-month futures price of this stock if spot-futures parity exists? (2 points)
5. The 4-month futures price on a non-dividend-paying stock is $23.60. The risk-free rate is 2.25 percent and the market rate is 10.45 percent. What is the spot rate for this stock if spot-futures parity exists?
What is the spot rate for this stock if spot-futures parity exists?
