# ACG 4201 Week 10 Individual Work

This Tutorial was purchased 2 times & rated A by students like you.

|  Write a review  |   Reviews (2)   |
Price: \$6.99

Attachments: No Attachments

Problem M-3
This requires you to analyze the impact on earnings on three hedged relationships – Futures Contract, Forward Contract, and Option. A clear understanding of how each of these hedging instruments “works”. Below are templates and a few of the answers. For example: For the “Futures Contract To Sell” on March 31 is \$600, calculated by multiplying 10,000 units (number of units per contract) by the difference between the futures price per unit (\$3.50) as of February 28 and the Futures price per unit as of March 31 (\$3.44). Note that the \$600 is a gain since the seller can buy the commodity at \$3.44 per unit on March 31 and sells it at a committed price of \$3.50 per unit. However, the net impact of earnings will be the difference between this gain (\$600) and the \$500 ([\$3.45 - \$3.40] x 10,000) decline in the value of the inventory.  Thus, the seller without hedging with the futures contract, the seller would have lost \$500, and had gained \$100 by hedging with the futures contract.

## Write a review

Order Id

Order Id will be kept Confidential

Rating:   A   B   C   D   F

Enter the code in the box below:

Related Products
\$6.99
Rating:B+
Purchased: 2 time
\$6.99
Rating:B+
Purchased: 2 time
\$6.99
No rating
Purchased: 1 time
\$6.99
Rating:A+
Purchased: 2 time
\$6.99
Rating:B+
Purchased: 1 time
\$6.99
No rating
Purchased: 3 time
\$6.99
Rating:A
Purchased: 2 time
\$6.99
No rating
Purchased: 2 time
\$6.99
Rating:A+
Purchased: 2 time
\$6.99
No rating
Purchased: 1 time
\$6.99
Rating:A+
Purchased: 1 time
\$6.99
Rating:A+
Purchased: 2 time