Chipzilla designs and manufactures circuit boards for computers. It has just signed a contract to supply 60,000 circuit boards at a fixed price in 12 months from now. The quantity of gold used to manufacture one circuit board is 0.01 ounces. Chipzilla will need to pay gold suppliers based on the spot gold price in 6 months from now. The company is concerned that changes in the price of gold could affect profit margins. The net convenience yield of gold is currently -1.0 percent per annum (note the minus sign). The risk-free interest rate is 5.0 percent per annum. There are 100 ounces of gold in one gold futures contract. The current spot price for gold is 1050 dollars per ounce. 1. What is the current price on the gold futures contract required to hedge this gold expense?
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This is 60,000 circuit boards times 0.01 ounces of gold per board, which equals 600 ounces of gold. Show more…
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Gold is alloyed (mixed) with other metals to increase its hardness in making jewelry. (a) Consider a piece of gold jewelry that weighs $9.85 \mathrm{~g}$ and has a volume of $0.675 \mathrm{~cm}^{3}$. The jewelry contains only gold and silver, which have densities of $19.3 \mathrm{~g} / \mathrm{cm}^{3}$ and $10.5 \mathrm{~g} / \mathrm{cm}^{3}$ respectively. If the total volume of the jewelry is the sum of the volumes of the gold and silver that it contains, calculate the percentage of gold (by mass) in the jewelry. (b) The relative amount of gold in an alloy is commonly expressed in units of karats. Pure gold is 24 -karat, and the percentage of gold in an alloy is given as a percentage of this value. For example, an alloy that is $50 \%$ gold is 12-karat. State the purity of the gold jewelry in karats.
Gold is alloyed (mixed) with other metals to increase its hardness in making jewelry. (a) Consider a piece of gold jewelry that weighs $9.85 \mathrm{~g}$ and has a volume of $0.675 \mathrm{~cm}^{3} .$ The jewelry contains only gold and silver, which have densities of $19.3 \mathrm{~g} / \mathrm{cm}^{3}$ and $10.5 \mathrm{~g} / \mathrm{cm}^{3}$, respectively. If the total volume of the jewelry is the sum of the volumes of the gold and silver that it contains, calculate the percentage of gold (by mass) in the jewelry. (b) The relative amount of gold in an alloy is commonly expressed in units of carats. Pure gold is 24 carat, and the percentage of gold in an alloy is given as a percentage of this value. For example, an alloy that is $50 \%$ gold is 12 carat. State the purity of the gold jewelry in carats.
Gold is alloyed (mixed) with other metals to increase its hardness in making jewelry. (a) Consider a piece of gold jewelry that weighs $9.85 \mathrm{~g}$ and has a volume of $0.675 \mathrm{~cm}^{3}$. The jewelry contains only gold and silver, which have densities of 19.3 and $10.5 \mathrm{~g} / \mathrm{cm}^{3}$, respectively. If the total volume of the jewelry is the sum of the volumes of the gold and silver that it contains, calculate the percentage of gold (by mass) in the jewelry. (b) The relative amount of gold in an alloy is commonly expressed in units of carats. Pure gold is 24 carat, and the percentage of gold in an alloy is given as a percentage of this value. For example, an alloy that is $50 \%$ gold is 12 carat. State the purity of the gold jewelry in carats.
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