Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. please show all work and no excel if possible 3)

Please show all work and no excel if possible 3) Let's assume we...

50.1K

Verified Solution

Question

Finance

image

Please show all work and no excel if possible

3) Let's assume we are a heating oil delivery service company that sells 80,000 gallons of heating oil every month its clients. The firm wants to hedge its position buy entering into a contract to buy its heating oil at the end of each month for the following month. The firm has decided it only needs to hedge for the next 5 months as the demand for heating oil significantly falls off after that. What would be the swap price of the 80,000 gallons of heating oil at the end of each month for the next 5-months if the following information is true? (Risk-free rate is provided per annum with continuous compounding) Month Forward Price Risk-Free Rate 1 $ 2.999 1.50% 2 $ 3.009 1.50% 3 $ 3.039 1.60% 4 3.075 1.75% 5 $ 3.105 1.75%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $50,000....

Electrical Engineering
1.2K views

HOW TO FIND FAULT IN UNDERGROUND CABLES NAME ALL THE DEVICES NAME ALL THE PROCESS NAME ANY DEVICE...

Basic Math
1.2K views

The graph of a fourth degree function AY L 0 36 1 0 4 0...

Basic Math
1.2K views

The time it takes to preform a task has a continuous uniform distribution between 43...

Calculus
1.2K views

Given matrices A and B shown below find 6 A 9 B B 2 5...

Algebra
1.2K views

A study of urban density shows that the population density B in persons mi2 is...

Accounting
1.2K views

During Y2, Aylmer Inc. purchased the following investments for cash but incorrectly recorded...

Accounting
1.2K views

Puvo, Incorporated, manufactures a single product in which variable manufacturing overhead is assigned on the...

Accounting
1.2K views

FreshPak Corporation manufactures two types of cardboard boxes used in shipping canned food, fruit, and...

Accounting
1.2K views

Quail Company is considering buying a food truck that will yield net cash inflows of...

Accounting
1.2K views

Required in Use the following information to answer questions 7 and 8 On January 1,...

Accounting
1.2K views

Instructions for February: 1. Analyze February's transactions on the transaction document. 2. Journalize February's transactions...