Problem 14.1a-14.2b Price Volume per Units Contract 50,000 cents per lbs 50,000 cents per Ibs Cotton Dec Cotton Mar 17 6
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Problem 14.1a-14.2b Price Volume per Units Contract 50,000 cents per lbs 50,000 cents per Ibs Cotton Dec Cotton Mar 17 6
Problem 14.1a-14.2b Price Volume per Units Contract 50,000 cents per lbs 50,000 cents per Ibs Cotton Dec Cotton Mar 17 62.7900 61.9100 Sell in millions by March 2017= Standard Deviation of Spot price = Standard Deviation of Future price = Correlations 4,000,000 4.000% 3.500% 0.80x Optimum Ratio for 100% Optimized Optimized Ratio adjusted Total Contracts Optimum number of contracts (rounded) a Transaction on Delivery/Expiration Day Cotton Prices b $0.05 $0.67 $0.00 $0.62 -$0.10 $0.52 Increase/Decrease in Spot Prices Scenarios - Spot Prices Cost from cotton sales + Profit/Loss form Forward Contract Net Payment for the European Goods
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