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1. You buy a 1-year put option and sell the corresponding call option. Both options are written on 1 share of IBM stock and both have an exercise price of $97. In addition, you also buy 1 share of IBM stock. What is the net payoff you receive from this 3-asset portfolio if at expiration the price of each share of IBM stock is $47?
2. What roles do the various disciplines have (i.e., Executive, Sales, Finance, Operations) in analyzing innovation projects as an investment portfolio?
3. During the credit crisis in the 2008 – 2009, banks were criticized for restricting their credit. Do you think banks should be allowed to restrict their credit during the credit crisis? Why or Why not?
Calculate the present value of this estimate of cash flows (operating costs in nominal$) if the nominal MARR is 10%. PV= Please show your work. I calculated Real MARR as 5.77% but have no idea what to do next.
What happens to the present value of a cash-flow stream when the discount rate increases? Place this in the context of an investment. If the required return on an investment goes up but the expected cash flows do not change, would you be willing to p..
Determining Portfolio Weights.
The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these compone..
Since they use the customer's electricity, there are no other inputs in to the cleaning process. What is their labor productivity?
First create a butterfly spread strategy using these options. (1) 190$ call priced at $8.19, (2) 200$ call priced at $10.15 and (3) $210 call priced at $13.07. Calculate the rate of return (in %) when the underlying stock price becomes $200.
Use an IS-MP model graph to show the effects of this change in the target for the federal funds rate. What happens to the output gap and to the actual inflation rate?
What is the after-tax cost of debt? What is the cost of equity?
Suppose an investment is estimated to have a cash flow of $100,000 per year for the next five years. At the end of the fifth year the property is expected to be sold for $1,000,000. What is the present value of the investment at a 10 percent discount..
Heather Smith is considering a bond investment in Locklear Airlines. The $1,000 par value bonds have a quoted annual interest rate of 11 percent and the interest is paid semiannually. The yield to maturity on the binds is 14 percent annual interest. ..
Suppose you know that a company’s stock currently sells for $55 per share and the required return on the stock is 8 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’..
The factor that can account for failure of the forward exchange rate to equal currency traders and ash, expectation of the future spot exchange rate is: Buggy Whip Manufacturing Company is issuing preferred stock yielding 8%. Selten Corporation is co..
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