Ch3-Arbitrage and Financial decision making

Topics: Petroleum, West Texas Intermediate, Gasoline Pages: 36 (1528 words) Published: October 4, 2014
9/12/2014

公司理财3_百度文库
百度文库首页 |

新闻 网页 贴吧 知道 音乐 图片 视频 地图 百科 文库

公司理财3
DOC

全部

首页
百度文库

应用文书

分类
总结/汇报

公司理财3
(2人评价)
公​​​​ ​​ ​
司理财,​外,​文
课 英

|

817人阅读

3
PPT

TXT

教育文库

PDF

个人认证

百度一下

百度特权 | 下载客户端 | 百度首页 | 登录 注册

帮助

XLS

机构专区

会议中心

开放平台

我的文库

Chapter 3
|

17次下载

|

举报文档

Arbitrage and Financial Decision Making
3.1 Valuing Costs and Benefits

1) Which of the following statements regarding the valuing of costs and benefits A) The first step in evaluating a project is to identify its costs and benefits. B) In the absence of competitive markets, we can use one -sided prices values.

C) Competitive market prices allow us to calculate the value of a decision the tastes or opinions of the decision maker.
D) Because competitive markets exist for most commodities and financial to determine cash values and evaluate decisions in most situations. Answer: B
Diff: 2
Skill: Conceptual

Use the information for the question(s) below.
分享到:

加入会员!送免财富值下载特权
1 /25
Alaska North Slope Crude Oil (ANS)
West Texas Intermediate Crude Oil (WTI)

下载
$71.75/Bbl
$73.06/Bbl

1 下载券

As an oil refiner, you are able to produce $76 worth of unleaded gasoline from one (ANS) crude oil. Because of its lower sulfur content, you can produce $77 worth of barrel of West Texas Intermediate (WTI) crude.

2) Another oil refiner is offering to trade you 10,150 Bbls of Alaska North Slope 10,000 Bbls of West Texas Intermediate (WTI) crude oil. Assuming you WTI crude, the added benefit (cost) to you if you take the trade is closest A) ($1,400)

B) $1,400
C) ($3,908)
D) $3,908

http://wenku.baidu.com/view/3323bcbc960590c69ec3760a

1/36

9/12/2014

D) $3,908

公司理财3_百度文库

Answer: B

金融频道申请认证!
财富值双倍

28

检索优先

专属展现

同行交流

Berk/DeMarzo · Corporate Finance

Explanation:

B) Total Benefits
No trade and refine WTI crude (base case)
10,000 Bbls × $77 of gasoline/Bbl = $770,000
Trade WTI for ANS crude
10,150 Bbls × $76 of gasoline/Bbl = $771,400
10,183 Bbls × $76 of gasoline/Bbl = $773,908
Added Benefits = Total Benefits - Base Case
Trade WTI for ANS crude
= $771,400 - $770,000 = $1,400

Diff: 2
Skill: Analytical

3) Assuming you currently have 10,000 Bbls of WTI crude, the added benefit (cost) to

http://wenku.baidu.com/view/3323bcbc960590c69ec3760a

2/36

9/12/2014

公司理财3_百度文库

3) Assuming you currently have 10,000 Bbls of WTI crude, the added benefit (cost) to sell the 10,000 Bbls of WTI crude and use the proceeds to purchase and refine ANS A) ($1,400)
B) $1,400
C) ($3,908)
D) $3,908
Answer: D
Explanation:

D) Total Benefits
No trade and refine WTI crude (base case)
10,000 Bbls × $77 of gasoline/Bbl = $770,000
Sell WTI and use proceeds to buy ANS
10,000 Bbls WTI × $73.06/Bbl = $730,600
Buy ANS/ crude
$730,600 $71.75/Bbl ANS = 10,182.57 or approx 10,183 Bbls ANS 10,183Bbls × $76 of gasoline/Bbl = $773,908
Added Benefits = Total Benefits - Base Case
Sell WTI and use proceeds to buy ANS
= $773,908 - $770,000 = $3,908

Diff: 2
Skill: Analytical

Chapter 3 Arbitrage and Financi

http://wenku.baidu.com/view/3323bcbc960590c69ec3760a

3/36

9/12/2014

公司理财3_百度文库

4) Assuming you just purchased 10,000 Bbls of WTI crude at the current market (cost) to you if you were to refine this crude oil and sell the unleaded gasoline A) $730,600
B) $770,000
C) $771,400
D) $773,908
Answer: B
Explanation:

Diff: 1
Skill: Analytical

B) Total Benefits
No trade and refine WTI crude (base case)
10,000 Bbls × $77 of gasoline/Bbl = $770,000

5) Another oil refiner is offering to trade you 10,150 Bbls of Alaska North Slope 10,000 Bbls of West Texas Intermediate (WTI) crude oil. Assuming you WTI crude at the current market price, the net benefit (cost) to you if you A) $730,600

B) $770,000
C) $771,400
D) $773,908
Answer: C
Explanation:

C) Total Benefits
Trade WTI for ANS crude
10,150 Bbls × $76 of...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Financial Decision Making Essay
  • Judgment and Decision Making Essay
  • Ethics in Accounting and Financial Decision Making Essay
  • Financial Indicators Decision Making Simulation Essay
  • Analyzing Financial Indicators for Decision Making Essay
  • The Effect of Financial Statement in Decision Making Essay
  • Agency Costs and Financial Decision-Making Essay
  • Importance of Financial Statement in Decision Making Essay

Become a StudyMode Member

Sign Up - It's Free
- Chapter 83 | Chap 111 2018-01-02 12:57:54 | Common Law