Examlex

Solved

Explain How a Manufacturer Who Has an Ongoing Need for Silver

question 40

Essay

Explain how a manufacturer who has an ongoing need for silver as a raw material in the production process might use futures to hedge.What does the manufacturer hope to gain?


Definitions:

Residual Income

Profit remaining after deducting all costs, including the cost of capital, usually used in managerial accounting as a performance measure.

Minimum Required Rate of Return

The lowest rate of return that a potential investment must offer to be considered acceptable, taking into account the investor's cost of capital and risk appetite.

Annual Turnover

The total sales or revenue a company generates in one year.

ROI Analysis

A financial metric used to evaluate the efficiency of an investment or compare the efficiency of several different investments, calculated by dividing the net profit from the investment by the initial cost of the investment.

Related Questions