The Chicago Mercantile Exchange has announced the introduction of a financial instrument that is based on...

The Chicago Mercantile Exchange has announced the introduction of a financial instrument that is based on rainfall in the state of Illinois. The standard agreement states that for each inch of rain over and above the average rainfall for a particular month, the seller will pay the buyer $1,000. What kind of financial instrument is this? Who could benefit from buying such a contract?

Expert Solution

jeff jeffy answered 1 year ago

Today's settlement price on a Chicago Mercantile Exchange (CME) € futures contract is $1.7537/€. Your initial...

Today's settlement price on a Chicago Mercantile Exchange (CME) € futures contract is $1.7537/€. Your initial performance bond is at $2,000. The maintenance performance bond is $1,600. The next three days' settlement prices are $1.7670/€, $1.7219/€, and $1.6985/€. (The contractual size of one CME € contract is €62,500). You take a long position in one futures contract (buy €), what is the total additional fund you need to deposit so that you keep your marginal account for the three days?...

1. How many types of commodities are available for trading in Chicago Mercantile exchange? 2. How...

1. How many types of commodities are available for trading in Chicago Mercantile exchange? 2. How far into the future can you trade on the prices of these commodities? 3. Which types of commodities are expected to have increased (decreasing) prices in the future?

Assume today’s settlement price on a Chicago Mercantile Exchange EUR (euro) futures contract is $.0564/MXN.

Assume today’s settlement price on a Chicago Mercantile Exchange EUR (euro) futures contract is $.0564/MXN. You BUY a futures contract to hedge an exposure to MXN10,000,000 payable. Your initial margin account balance is $15,000. The next three days’ settlement prices are $.0566/MXN, $.0563/MXN, and $.0561/MXN. Calculate the changes in the margin account (and the new balances) from daily marking-to-market adjustments over the next three days. The contract size is 10,000,000 Mexican Pesos.ANS: DAY 0 MB = $15,000 DAY 1 ∆ = _________ MB...

FIN303: Financial Management Company ABC has just announced earnings of $2 per share. Based on the...

FIN303: Financial Management Company ABC has just announced earnings of $2 per share. Based on the last five years, earnings have grown at a rate of 20% per annum and the company expects this to continue for the next five years, after which it expects earnings to remain constant forever. The company has a policy of paying out 30% of its earnings as dividends. ABC stock has a beta of 1.2. The yield to maturity on 10-year government bonds is...

Scenario: You are the CEO of MegaGlobe Business Solutions, a financial consulting corporation based in Chicago...

Scenario: You are the CEO of MegaGlobe Business Solutions, a financial consulting corporation based in Chicago that has just recently opened new offices in São Paulo, Brazil and Shenzhen, Guangdong, China. As part of this transition, your employees will now be working collaboratively with employees at these locations to provide financial consulting services in these new markets. To assist with the transition, you will develop an internal leadership blog for your employees that addresses the implications of leading within a...

Please discuss with examples what is a primary financial instrument and what is a derivative financial instrument?

According to AASB 132, please answer:Please discuss with examples what is a primary financial instrument and what is a derivative financial instrument?

AGOURA MANUFACTURING MINI-CASE Agoura Manufacturing has announced the introduction of a new product. They forecast product-...

AGOURA MANUFACTURING MINI-CASE Agoura Manufacturing has announced the introduction of a new product. They forecast product- specific sales demand to last five years. Then because this product is somewhat of a fad, they will terminate the project. Manufacturing of the product will require the acquisition of an existing facility and purchase and installation of some new equipment. The following information describes the new project: Capital Investment requirement: Cost of new plant and equipment: $13,750,000 Shipping and installation costs: $ 465,000...

AGOURA MANUFACTURING MINI-CASE Agoura Manufacturing has announced the introduction of a new product. They forecast product-...

AGOURA MANUFACTURING MINI-CASE Agoura Manufacturing has announced the introduction of a new product. They forecast product- specific sales demand to last five years. Then because this product is somewhat of a fad, they will terminate the project. Manufacturing of the product will require the acquisition of an existing facility and purchase and installation of some new equipment. The following information describes the new project: Capital Investment requirement: Cost of new plant and equipment: $13,750,000 Shipping and installation costs: $ 465,000...

AGOURA MANUFACTURING MINI-CASE Agoura Manufacturing has announced the introduction of a new product. They forecast product-...

AGOURA MANUFACTURING MINI-CASE Agoura Manufacturing has announced the introduction of a new product. They forecast product- specific sales demand to last five years. Then because this product is somewhat of a fad, they will terminate the project. Manufacturing of the product will require the acquisition of an existing facility and purchase and installation of some new equipment. The following information describes the new project: Capital Investment requirement: Cost of new plant and equipment: $13,750,000 Shipping and installation costs: $ 465,000...

AGOURA MANUFACTURING MINI-CASE Agoura Manufacturing has announced the introduction of a new product. They forecast product-...

AGOURA MANUFACTURING MINI-CASE Agoura Manufacturing has announced the introduction of a new product. They forecast product- specific sales demand to last five years. Then because this product is somewhat of a fad, they will terminate the project. Manufacturing of the product will require the acquisition of an existing facility and purchase and installation of some new equipment. The following information describes the new project: Capital Investment requirement: Cost of new plant and equipment: $13,750,000 Shipping and installation costs: $ 465,000...

Question

The Chicago Mercantile Exchange has announced the introduction of a financial instrument that is based on...

Solutions

Expert Solution

Related Solutions