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Firm USA puts in a bid of 1 million (British Pounds) on a property in England. If the bid is accepted, the firm will have to pay 1 million (British Pounds) in 6 months.
Current spot rate: 1 British Pounds=$1.4
Assume the firm enters into a long position on the following at- the- money call option:
Contract size: 31.250 (British Pounds)
Exercise price: $1.4
Option Premium: $0.05
Expiration: on a date after 6 months from now
The call position contains 32 contracts. Assume that after 6 months, the pound appreciates in value to 1 British Pound=$1.7, and the call premium increases to $.25.
Calculate the net gain(loss) on the hedged position if the bid is accepted.
New Business is just being formed by 10 investors, each of whom will own 10% of the business. The firm is expected to earn $1,000,000 before taxes each year. The corporate tax rate is 34% and the personal tax rate for the firm's investors is 35%.
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A bond with a 7% coupon rate makes payments on January 15 and July 15 of each year (181-day coupon period). On January 30 (15 days have passed since the last semiannual coupon was paid), the ask price for the bond was reported as 100.0625. On April 1..
Calculate the Expected Value of Losses, Variance, Standard Deviation and Coefficient of Variation. Calculate mean or expected loss, Standard deviation, Coefficient of variation and In what range should theft losses fall 99 percent of the time?
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