Quiz
chapter 6
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Questions in this quiz (13)
1Refer to the table 6.1. What is the approximate annualized lease rate on the 12-month corn forward contract?
- A 0.00%
- B2.25%
- C3.92%
- D7.84%
2Refer to the table 6.1. What is the approximate annualized lease rate on the 18-month soybean forward contract?
- A0.69%
- B1.52%
- C2.69%
- D3.31%
3 Refer to the table 6.1. If wheat farmers expect a return of 8.0% on their investment in wheat, what is the approximate implied increase in wheat commodity prices over the next 6 months?
- A 3.75%
- B4.59%
- C5.26%
- D6.37%
4Refer to the table 6.1. Which of the following terms most accurately describes the forward curve for soybeans over the next two years?
- AContango
- BBackwardation
- CContango and backwardation
- DNone of the above
5Refer to the table 6.1. Given a lease rate of 7.0% on the 24-month corn forward contract, what is the approximate potential arbitrage profit per contract?
- A3.68 cents
- B4.48 cents
- C5.84 cents
- D6.90 cents
6Refer to the table 6.1. The lease rate on the 6-month soybean contract is 0.35%. What is the implied annual storage cost if the cost is continuously paid and proportional?
- A0.84%
- B1.62%
- C2.30%
- D4.0%
7The spot price of gasoline is 258 cents per gallon and the annualized risk free interest rate is 4.0%. Given a lease rate of 1.0%, a continuously paid storage rate of 0.5%, and a convenience yield of 0.75%, what is the no-arbitrage price range of a 1-year forward contract (in cents)?
- A265.19 to 267.19
- B258 to 265.19
- C258 to 267.19
- D247.16 to 265.19
8Nine-month gold futures are trading for $1565 per ounce. The spot price is $1509 per ounce. LIBOR during each of the upcoming 4 quarters is listed as 1.04%, 1.22%, 1.30%, and 1.35%, respectively. Calculate the 9-month lease rate on the futures contract.
- A2.4%
- B2.1%
- C1.3%
- D0.0%
9Forward prices for gold, in dollars per ounce, for the next five years are 1350, 1400, 1560, 1675, and 1756, respectively. A mine can be opened for 3 years at a cost of $2,000. Annual mining costs are a constant $500 and interest rates are 5.0%. When should the mine be opened to maximize NPV?
- AYear 1
- BYear 2
- CYear 3
- DNever
10The 6-month futures price for oil is $96.60 per barrel (or 2.30 cents per gallon). The 6-month futures prices for gasoline and heating oil are 2.50 cents and 2.15 cents, respectively. What is the gross margin on a simple 3-2-1 crack spread?
- A$0.25
- B$0.35
- C$0.54
- D$0.68
11The spot price of corn is $5.85 per bushel. The opportunity cost of capital for an investor is 0.5% per month. If storage costs of $0.04 per bushel per month are factored in, all else being equal, what is the likely price of a 4-month forward contract?
- A$5.808
- B$5.736
- C$5.968
- D$6.006
12The spot price of corn is $5.82 per bushel. The opportunity cost of capital for an investor is 0.6% per month. If storage costs of $0.03 per bushel per month are factored in, all else being equal, what is the future value of storage costs over a 6-month period?
- A$0.1534
- B$0.1684
- C$0.1772
- D$0.1827
13Oil is selling at a spot price of $42.00 per barrel. Oil can be stored at a cost of $0.42 per barrel per month. The opportunity cost of capital is 7.2% per year (or 0.6% per month). What is the gain or loss realized by an oil refinery that floats its exposure and purchases oil on the spot market in 2 months at a price of $43.00 per barrel, instead of hedging with a forward contract?
- A$0.35 gain
- B$0.35 loss
- C$1.00 gain
- D$1.00 loss
Information
- Description
- Quiz on chapter 6, created by Beatriz Peregrina Viñolo on 30/11/2014.
- Author
- Beatriz Peregrina Viñolo
- Language
- Español
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- 844
- History
- Created on 30 Nov 2014 · updated on 12 Dec 2016
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