Answers
Why do we have to use the continuously compound interest rate to calculate the future price ?
The future price calculation model is in future market (Ex: F=Se^rT). Why we do not use quartely or yearly compound but the continuous compound.
Since the future market changed on daily basis so do the interest rates thats why we calculate compound interest on daily basis.
Why would the prices differ? The key difference is the daily settlement of the futures contract. The investor in a futures contract must maintain ...
If so, how are options used to help predict the future price of a stock?
Possibly through price difference in a put vs. call?
They aren't usually that good at predicting prices.
An increase in option prices without a concurrent increase in the stock price is a better predictor that volatility is increasing than that the price will go up.
8. Which of the following explains why firms and workers fail to predict the future price level accurately?
A. Businesses are often slow to adjust wages.
B. Menu costs make some prices sticky.
C. Predicting the future price level accurately is impossible.
D. Contracts make some wage and prices sticky.
E. All of the choices given here.
I think it's (E). There are reasons why expected price differs from actual price:
1.The Sticky-Wage Theory
2.The Sticky-Price Theory
3.The Misperceptions Theory
A,B,C, and D are all examples of those theories.
If many of the suppliers in a market suddenly raise their expected future price for the good one month into the future (due to some recent unexpected event), this lead to a ____ in supply today in the market and a _____ in the equilibrium price today in the market.
A. rise; fall
B. fall; rise
C. fall; fall
D. rise; rise
I have looked on several financial/investment websites and in at least two instances a stock that I currently hold for a small cap company is projected to increase by a factor of 176% over the next twelve months. What data and/or calculations do the analysts use to make this estimate or projection?
If the analyst is a fundamental advisor, s/he is likely looking at future cash flows. Those are dependent on the competitive landscape, current management, projected future sales, and the overall path of the US and global economy.
Take a look at this link.
http://en.wikipedia.org/wiki/Fundamental _analysis
If it's a small cap, see if S&P or ValueLine follow it. I prefer using them rather than other analysts' reports as I think they are a tad bit more objective.
If it's a technical analyst (AKA chartist), it is based on the sales prices and volumes of the prior period (may be 3 days, 50 days, or almost any other number of days.
http://www.investopedia.com/university/t echnical/
There's nothing wrong with technical analysis, IMHO. I use to determine buy and sell prices myself, but I use it in conjunction with fundamental analysis.
Exxon Mobil profit falls 68%, missing target
Excluding a one-time gain $1.45 billion, Exxon Mobil earned $2.58 a share in the year-ago period.
Capital expenditures fell 5% to $6.49 billion, mostly on a stronger dollar rather than cutbacks in spending.
Revenue fell to $82.3 billion from $137.7 billion.
Analysts surveyed by FactSet Research expected earnings of $1.03 a share.
Analyst Jacques Rousseau of Soleil Securities said Exxon Mobil missed earnings estimates on lower-than-expected international natural gas prices and weaker-than-expected results in its refining and marketing units. He lowered his 2009 earnings estimate to $4.10 a share from $4.25 a share and reiterated his buy rating on the stock.
Shares of Exxon Mobil mostly sat out big gains in the energy sector for most of the day, before rising late in the session by 12 cents to close at $73.96. See full story.
Exxon Mobil Vice President of Investor Relations David Rosenthal told analysts on a conference call the oil giant plans to keep capital spending flat between 2009 and 2008, when the company spent about $26 billion.
Econbrowser: Futures As Predictors of Commodity Prices
This periodical examines the relationship between particle and futures prices for commodities, including those for vitality (offensive oil, gasoline, heating oil markets and above gas), adored and lowly metals (gold, silver-toned, aluminum, copper, leading, nickel and tin), and agricultural commodities (corn, soybean and wheat). In specific, we interrogate whether futures prices are (1) an unbiased and/or (2) on the mark predictor of resulting catch sight of prices. We find that while spirit futures prices are large unbiased predictors of future sully prices, there are unquestioned great exceptions. For both low and alembicated metals, the results are much less favorable to unbiasedness postulate. For overdone metals and copper and place, we strongly drop the null that β=1 at all three horizons. For the these other bad metals, while we cannot turn one's back on that β=1, due to overwhelmingly touchstone errors. Once, both corn and soybean futures have β close to 1, while wheat has β
News
OIL FUTURES: Crude Tad Lower In Asia Amid Weak Regional SharesMarketWatch - Feb 01, 2010
Reuters South AfricaIn the more immediate future, however, analysts predict a continued slide for crude prices, although some also see a buying opportunity at these levels. What Does the CFTC's Proposal for Commodity ETFs Mean?all 483 news articles »
GoldAlert - Feb 01, 2010
ReutersGold futures on the COMEX rose $21.20, or 2%, to $1105 per ounce, buoying all investments tied to the gold price, including gold ETFs and gold stocks. Articles in January, 2010Gold Price Fundamentals Strong – $1400 Gold in 2010?all 111 news articles »
BusinessWeek - Feb 01, 2010
ReutersMeanwhile, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.63 percent from 3.60 percent late Exxon 4Q Profits Fell 23%; Production UpExxon Mobil Corporation Q4 2009 Earnings Call TranscriptExxon Mobil Corp. Beats Analyst Expectations; XOM, PTR, Eall 1,255 news articles »
The Guardian - Feb 01, 2010
CBC.ca by forcing through a price increase for digital versions of its bestselling titles. Apple and Amazon are locked in a fight over the future of the book. Publishers Rewrite the Book on PricingAmazon Goes for the JugularWhose move? Amazon and Macmillan vie for position - -all 595 news articles »
ABC News - Feb 01, 2010
Money Woes Could Threaten High-Speed Rail's FutureThe proposed price tag of the high-speed rail corridors is estimated to cost at least $60 billion, and possibly more than $100 billion over the next decade and more »