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The multiplier for a futures contract on the stock-market index is $250. The maturity of the contract is one year, the current level of the index is 600, and the risk-free interest rate is 0.4% per month. The dividend yield on the index is 0.2% per month. Suppose that after one month, the stock index is at 607. a. Find the cash flow from the mark-to-market proceeds on the contract. Assume that the parity condition always holds exactly. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Cash flow $ b. Find the one-month holding-period return if the initial margin on the contract is $15,000. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Holding-period return %
After 10 years, you win the lottery and want to pay off the rest of what you owe. How much will you need to pay?
Project A has the following expected sales and operating costs (these do not include depreciation).
Explain with examples how the cost of capital is determined. Calculate the differences in cost and risk. Explain why the costs and risks of external financing are important for the organization to understand.
Consider a 30-year corporate bond paying 9 percent semi-annual coupon. The current yield to maturity is 11 percent. a. Find the modified duration. b. Refer to part a. If the interest increases by 25 basis points, what is the exact change in price? c...
Steamboat Springs Furniture, Inc., is considering purchasing a new finishing lathe that costs $63,101.00. The lathe will generate revenues of $95,995.00 per year for five years. What is the project cash flow for the first year of the project?
Penn Company was formed on July 1, 2012. It was authorized to issue 300,000 shares of $10 par value common stock and 100,000 shares of 8% $25 par value, cumulative and nonparticipating preferred stock. Penn Company has a July 1–June 30 fiscal year. P..
Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have an 9% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen ..
The market consensus is that Analog Electronic Corporation has an ROE =9% and a beta of 1.80. It plans to maintain indefinitely its traditional plowback ratio of 2/4. This year's earnings were $3.2 per share. The annual divided was just paid. The con..
Which of the following would not improve NPV given no other changes in the business assumptions a) A decrease in AR because of a shorter collection period b) an increase in accrued wages due to changing to a monthly payroll from weekly payroll c) inc..
McEwan Industries sells on terms of 3/10, net 35. Total sales for the year are $1,311,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 50 days after their purchases. What is the days sales outstan..
What is the length of the firm’s cash conversion cycle?
You have just been offered a job. You have the choice of two different salary arrangements. You can have 45,000 per year for the next two years, payable at the end of each year; or you can have 32,500 per year for the next two years, payable at the e..
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