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One year ago, you bought a call option on 200,000 euros with an expiration date of one year. You paid a premium on the put option of $.04 per unit. The exercise price was $1.26. Assume that one year ago, the spot rate of the euro was $1.29, the one-year forward rate exhibited a discount of 2%, and the one-year futures price was the same as the one-year forward rate. From one year ago to today, the euro depreciated against the dollar by 3 percent. Today the put option will be exercised (if it is feasible for the buyer to do so). 1) Determine the total dollar amount of your profit or loss from your position in the put option. 2) Now assume that instead of taking a position in the put option one year ago, you sold a futures contract on 200,000 euros with a settlement date of one year. Determine the total dollar amount of your profit or loss.
Davis, Inc., currently has an EPS of $2.16 and an earnings growth rate of 7 percent. The benchmark PE ratio is 20. What is the target share price in 7 years?
A stock has a beta of 1.7 the market risk premium id 8.0% and the risk free rate is 2%. What is its required expected return based on its risk?
Logue Lock Company expects its fixed costs next year to be $750,000. - How large could the additional fixed costs from the new equipment be without affecting the breakeven point?
If you start making $110 monthly contributions today and continue them for five years, What is the present value of this annuity?
FIN 6644 Global Financial Strategies Detail the hedging strategy with options and estimate the cost today of an options strategy that will eliminate exchange rate risk.
Green Landscaping, Inc. is using net present value (NPV) when evaluating projects.
A portfolio manager in charge of a portfolio worth $10 million is concerned that the market might decline rapidly during the next six months and would like to use options on the S&P 100 to provide protection against the portfolio falling below$9.5 mi..
If a firm’s borrowing rate exceeds its ROA, then ROE will ______.
What are some advantages of bonds? What are some disadvantages to bonds?
Sinan is considering investing in a project with an initial cost of 68000 and a four year life span. what is the projects average accounting return.
Luke Coal Mining, Inc. is considering opening a strip mine, the cost of which is $4.4 million. Cash flows will be $27.7 million, all coming at the end of one year. The land must be returned to its natural state at a cost of $25 million, payable after..
You want a new automobile for personal use. Neither depreciation nor interest payments will be tax deductible. What is the indifference point?
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