Business

Order Description Question 1 - Compulsory a) A financial analyst checks the financial markets data for commodities using their mobile phone. The prices for two different commodities catch her attention. For the first commodity the expected spot price (i.e. taken as the current spot price) is higher than the futures price while for the second commodity the forward price is higher than the expected spot price. Critically discuss the finance theory(ies) that explain these situations? b) Computer Blue Ltd is a manufacturer of computers that uses gold as an input to production. Explain which position on the futures contract Computer Blue Ltd should take and, based on that, complete the Table below. Calculate the profit/loss, total value of the future contract, and mark-to-market settlement for the following future contract of Computer Blue Ltd. Gold Contract 50,000lbs, cents per lb. Day Futures Profit loss Total value price$ per lb of contract 0 0.1628 n/a 1 0.1623 2 0.1630 3 0.1665