Exhibit 14-7
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\quad$

question 41

Multiple Choice

Exhibit 14-7
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Black Gold Industries (BGI) is an independent oil producer with production capacity of 500,000 barrels per month. Due to the cost structure of the business, BGI needs to receive $56.50 per barrel in order to remain solvent. On the other side of this situation is Petrochemicals Unlimited (PU) which uses an average of 500,000 barrels of West Texas crude oil in its normal production operations. The nature of PU's business is such that they will financially suffer if they have to pay more than an average of $57.80 per barrel for oil over the next six years. To hedge against their exposure to volatile oil prices, BI and PU contact a swap dealer to arrange the six-year oil swap described below: - $\quad$ Settlement is made monthly.
- The notional principal is for 500,000 barrels per month.
- The monthly WTI index value is determined as the average of the daily settlement prices for the crude oil futures contract traded on the New York Mercantile Exchange (NYMEX) .
- The swap dealer pays BGI $\$ 57.00$ per barrel.
- BGI pays the swap dealer the average NYMEX Oil futures price per barrel.
- $\quad$ PU pays the swap dealer $\$ 57.50$ per barrel.
- The swap dealer pays PU dealer the average NYMEX Oi futures price per barrel.
-Refer to Exhibit 14-7. Describe the transaction that occurs between PU and the swap dealer if the monthly average oil futures settlement price is $55.50.

• A) PU pays the swap dealer $850,000
• B) The swap dealer pays PU $1,000,000
• C) PU pays the swap dealer $1,000,000
• D) The swap dealer pays PU $850,000
• E) None of the above.

Analyze the role of fundamental social psychological concepts in understanding human behavior.

Understand the statistical measures used to interpret psychological research.

Comprehend the psychological underpinnings of romantic and interpersonal attraction.

Recognize the influence of physical presence and group dynamics on individual behavior in emergency situations.

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Definitions:

Continuous Random Variable

A variable that can assume an infinite number of values within a specific range and is used in probability and statistics.

Homes Sold

The number of residential properties that have been sold over a specific period of time.

Discrete Random Variable

A variable that can only take on a finite or countably infinite set of distinct values, often representing counts or categories.

Standard Deviations

The measure of the dispersion or spread of data points in a data set from its mean, reflecting how much variation there is from the average.