1. What is an options on a futures? Explain the workings of this derivatives contract.
2. Gibson's has sales for the year $539,400, cost of goods sold equal to 74 percent of sales, and have an average inventory of $78,000. The profit margin is 8 percent and the tax rate is 30 percent. How many days, on average does it take the company to sell an inventory item? Assume 365 days per year. Please show work.
3. You own a portfolio that has a total value of $215,000 and it is invested in Stock D with a beta of .86 and Stock E with a beta of 1.39. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D? Please show work.