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Mary Craft is expecting large-capitalization stocks to rally close to the end of the year. She is pessimistic, however, about the performance of small-capitalization stocks. She decides to go long one December futures contract on the Dow Jones Industrial Average listed at a price of 9,020 and short one December futures contract on the S&P Midcap 400 Index listed at a price of 369.40. The multiplier for a futures contract on the Dow is $10, and the multiplier for a futures contract on the S&P Midcap 400 is $500. When Craft closes her position towards the end of the year, the Dow and S&P Midcap 400 listed futures prices are 9,086 and 370.20, respectively. How much is the net gain or loss to Craft? Hint: The price of an index futures contract with a multiplier is the listed price times the multiplier.
Required rate of return - risk free+ (market return- t=risk free rate) and Return for the government bond - I have used the data for 10 years since the projects period is 10 years
If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY).
Two alternative investment proposals are under consideration for a vacant owner by Urban Development Corporation. Plan A would require an immediate investment of $120,000 and first-year expenditure for property taxes, maintenance, and insurance of $4..
A share of stock will pay a dividend of $1.9 one year from now, with dividend growth of 5.3 percent thereafter. According to the constant dividend growth model, if the required return is 14.4 percent, what should the value of the stock be 4 years fro..
Miller Manufacturing has a target debt–equity ratio of .50. Its cost of equity is 13 percent, and its cost of debt is 7 percent. If the tax rate is 40 percent, what is the company’s WACC?
Could I Industries just paid a dividend of $1.30 per share. The dividends are expected to grow at a 15 percent rate for the next 5 years and then level off to a 6 percent growth rate indefinitely. If the required return is 12 percent, what is the val..
Maxwell Software, Inc., has the following mutually exclusive projects. Year Project A Project B 0 –$17,000 –$20,000 1 10,500 11,500 2 7,000 8,000 3 2,600 7,000 a-1. Calculate the payback period for each project. Payback period Project A years Projec..
what coupon rate do you need to set? Assume that for both bonds, the next coupon payment is due in exactly six months.
Your firm is considering leasing a new robotic milling control system. The lease lasts for 4 years. The lease calls for 5 payments of $280,000 per year with the first payment occurring at lease inception. The system would cost $900,000 to buy and wou..
What amount will be paid by the insurance company for the loss?
The current rate of return on treasury securities is 1.8%. The expected return on the S&P 500 is 12.2%. What is the required rate of return on Halliburton Company which has a beta coefficient of 1.49?
Compute the depreciation schedule using: (a) MACRS depreciation (b) Straight-line depreciation (c) Sum-of-years' digits (SOYD) depreciation (J) Double declining
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