It may be difficult and too expensive for a business to full…

It may be difficult and too expensive for a business to fully insure against losses due to business disruption a) because firms that know they are more prone to business disruption based on inside information might demand more insurance than those less prone to disruptions making the price of full insurance very high b) because firms may not expend as much effort to get operations up and running if they are fully insured, again requiring insurance companies to charge very high price for coverage given management’s potentially weak effort to mitigate losses c) all the above are quite possible d) none of the above

Assume that you agree to take delivery of 1000 ounces of gol…

Assume that you agree to take delivery of 1000 ounces of gold in 4 months at a forward price of $1750.  Assume that it is agreed that the contract will be cash settled.  If the price of gold is $1800 in 4 months what is your profit or loss on the 1000 ounce forward contract.  Profit is a positive number of dollars and loss is negative amount of dollars?  (for example if answer is profit of $12,000 write 12,000.  If answer is lost 12,000, write -12,000.)

A stock is currently priced at $50 a share. There are two ca…

A stock is currently priced at $50 a share. There are two call options with the stock as the underlying asset.  The time till expiration is 3 weeks.  Option A is out of the money and has an exercise price of $55. Option B is at the money and has an exercise price of $50.  Option B (at the money) should have a higher hedge ratio,