You decide to invest in gold: you purchase 30 ounces of gold at $1,550 per ounce and hold it for two years. At the end of the two years you sell your gold for $1,700 per ounce. What is the return on your investment?
You decide to invest in gold: you purchase 30 ounces of gold at $1,550 per ounce...
Prema purchased 27 ounces of gold in 2005 for $447 per ounce in order to try to diversify her investment portfolio. She sold a third of her holdings in gold in 2009 at a price $850 per ounce. She sold the rest of her gold holdings in 2010 for $1,129 per ounce. What would her profit have been if she sold all the gold holdings in 2009?
18. You sell one December gold futures contract when the futures price is $1,010 per ounce. The contract is on 100 ounces of gold and the initial margin per contract that you provide is $2,000. The maintenance margin per contract is $1,500. During the next day the futures price rises to $1,012 per ounce. What is the balance of your margin account at the end of the day? A. $1,700 B. $2,200 C. $1,300 D. $1,800 19. A hedger takes...
Suppose the current price of gold is $1,520 an ounce. Hotshot Consultants advises you that gold prices will increase at an average rate of 13% for the next two years. After that the growth rate will fall to a long-run trend of 3% per year. Assume that gold prices have a beta of 0 and that the risk-free rate is 5.75%. What is the present value of 1.6 million ounces of gold produced in 9 years? (Do not round intermediate...
Some time ago, a company negotiated a long forward contract to purchase 100 ounces of gold at the price of $1400 per ounce. The contract will expire in three months (from now). The current three-month forward price of gold is $1420 per ounce. The three month risk-free interest rate (with continuous compounding) is 8%. What is the value of the forward contract to the company?
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Question 4 (10 marks) Suppose the spot price of gold is $1,500 per troy ounce today. The futures price of gold for delivery in 1 year is $1,530 per troy ounce. Assume that the one-year gold futures contract is correctly priced and there are no storage and insurance costs. Also assume that the risk-free rate is compounded annually and you can borrow and lend money at the risk-free rate. a). What is the theoretical parity price of a two-year...
On 1.11.2019 you enter into a long futures contract for 100 ounces of gold at $1,500 an ounce. Your initial margin is set at 15% of the contract value. The settlement prices for gold on the subsequent two days are: $1550 on 2.11.2019 and $1,470 on 3.11.2019. Show the “marking-to-market” and the adjustment in the margin account at the end of each of the two trading days. What is the total 2-day gain or loss on the position?
19 Suppose that the GBP is pegged to gold at £20 per ounce. The USD is pegged to gold at $35 per ounce. This implies an exchange rate of $175/18. How might an Investor take advantage of situation if the current market exchange rate is $1.60/1£? Multiple Choice points 02-50-30 0 Buy gold at $35 per ounce. Convert the gold to $200 at $20 per ounce. Exchange the €200 for dollars at the current rate of $160 per pound 0...
Suppose you purchase a 30-year zero-coupon bond with a yield to maturity of 5.5 % You hold the bond for five years before selling it.a. If the bond's yield to maturity is 5.5 % when you sell it, what is the rate of return of your investment? b. If the bond's yield to maturity is 6.5 % when you sell it, what is the rate of return of your investment? c. If the bond's yield to maturity is 4.5 %...
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6.3%. You hold the bond for five years before selling it a. If the bond's yield to maturity is 6.3% when you sell it, what is the annualized rate of return of your investment? b. If the bond's yield to maturity is 7.3% when you sell it, what is the annualized rate of return of your investment? c. If the bond's yield to maturity is 5.3% when...
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Suppose that you have $14,000 to invest and you are trying to decide between investing in project A or project B. If you invest in project A, you will receive a payment of $16,500 at the end of 2 years. If you invest in project B, you will receive a payment of $25,000 at the end of 11 years. Assume the annual interest rate is 5 percent and that both projects carry no risk. Instructions: Round your...