Instructions: Solve the following problem. To receive credit, readers must be able to follow your logic and you must explain each step in detail. Please label each step, identify each equation and variable, and explain your answer.

The management of a mutual fund plans to sell a basket of stocks in three months. The stocks are similar to the S&P 500. It seeks protection against a decrease in the price of the stocks. The current price of the S&P 500 Index is $2352.40. The futures price of index is $2397.80. The number of shares to be hedged is 1,000, and the number of shares per futures contract is 100. Therefore, 10 contracts will be hedged.

1.   Define the following:

1. Hedge
2. Speculation
3. Futures contract

2.   Describe in detail the hedge created by the mutual fund. That is, what action will the mutual fund take?

3.   Describe the outcome of this hedge in detail if the price of the index is $2304.20 per share and the price of the futures contract is $2349.60 per share when the hedge is lifted.

4.   Describe the outcome of this hedge in detail if the price of the index is $2392.50 per share and the price of the futures contract is $2437.90 per share when the hedge is lifted. Base your answer on the original information given, not your answer in 3 above.

During the month of February Hallmark announced that there is a shortage for romantic greeting cards due to a delivery problem. Draw and the graph and explain which curve shift first and, then what cause the second curve to shift. Final what happens to price and quantity at the nee equilibrium point?

universal laser inc just paid a dividend of $3.35 on its stock, growth rate is expected to be constant 4% indefinitely. Investors require a return of 16% for first 3 yrs , 14%for next 3 yrs and 12% thereafter.What is the current share price of the stock.

!. A and B. You have just signed a contract to purchase your first house. The price is $230,000 and you have applied for a $100,000, 20-year, 6.8% loan. Annual property taxes are expected to be $6,670. Hazard Insurance costs $600 per year. Your car payment is $175, with 46 months left. Your monthly gross income is $3,225. What is your monthly payment of principal and interest?

You have just signed a contract to purchase your first house. The price is $190,000 and you have applied for a $120,000, 28-year, 6.0% loan. Annual property taxes are expected to be $2,647. Hazard Insurance costs $600 per year. Your car payment is $150, with 46 months left. Your monthly gross income is $4,075. What is your monthly PITI (principal, interest, taxes, and insurance)?

S2 Margin Analysis. If a six-pack of a fruit-soda sells for $6 retail and the retailer's margin is 25% and the wholesaler-distributor margin is 33% then what is the manufacturer's price?

2- Price Setting Analysis. The Eco-spout entrepreneur wishes to pay himself and his son $25,000 each. He also plans $20,000 in extra fixed selling costs and a decrease in estimated variable sales costs from 10 cents down to five cents a unit. What is the new target share of reached market needed in the first year?

3 He also is able to get a better average variable manufacturing cost of 25 cents per unit and not 40 cents. He also decides to sell the unit wholesale for $0.99 and not $0.90. What is the new target share of reached market needed in the first year?

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The company’s fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear’s trading account occurred during December 2018 and the first week of 2019.

The Baldwin Company is considering investing in a machine that produces bowling balls. The cost of the machine is $100,000 and production is expected to be 8,000 units per year during the five-year life of the machine. The expected resale value is $5,000 (in real terms).
Since the interest in bowling is declining, the management believes that the nominal price of bowling balls will increase at only 2% per year. The nominal price of bowling balls in the first year will be $20. On the other hand, plastic used to produce bowling balls is rapidly becoming more expensive. Because of this, production costs are expected to grow at 10% (nominally) per year. First-year nominal production costs will be $10 per unit.
The company's nominal cost of capital is 15%. The rate of inflation is 5%. Ignore taxes. Should the project be undertaken?

Please give me a answer with equations and step by step solutions so that I can understand.

1. Suppose the firm is a monopolist. It faces a downward-sloping demand curve, P(Q). If it also has non-negative marginal cost, will it choose a quantity on the demand curve where the price elasticity of demand is less than, greater than, or equal to -1? Explain.

Two Hints: First, recall that R(Q) = P(Q) times Q, and that the price elasticity of demand is defined as .

Second, recall the condition MR = MC. Think about how the firm’s revenue will change if it starts at a point where the price elasticity is exactly -1 and increases Q by 1%, and remember that any increases in Q has a marginal cost.  

Cain buys a 3-year $1000 10% bond with annual coupons, redeemable at par. The price assumes an annual effective yield rate of 8%. First, find the price of this bond.

Every time Belial receives a payment, he deposits the money into a savings account, with an annual effective interest rate of i. At the end of three years, he puts the last payment he receives from the bond into the savings account and observes that overall, his yield rate was 9% (it is as if he put the original price amount to a savings account with 0.09 annual effective interest rate).

What must i be so that this scenario could happen?

2) Demand and Marginal Revenue

a) Explain why a single price monopolist faces a downward sloping demand and why their downward sloping demand results in P>MR.

b) Explain why a 1) perfectly competitive market and 2) Perfect (first degree) price discriminating monopolist determines their demand curve, in general compare their demands, and despite their difference in demand why P=MR for both.

c) For a member of a cartel (for a firm in a cartel), explain the relationship between price and marginal revenue before they form a cartel and after they form a cartel. (Hint: why do cartels also have a quota for each member?)