Hybrid bonds-gold-indexed securities

Assignment Help Business Management
Reference no: EM133055848

Hybrid Bonds: Gold-Indexed Securities Attached are extracts from the first page of the prospectus for Gold-Denominated Depositary shares sold by Freeport McMoran Copper and Gold (FCX). The depositary shares have features that are very much like a bond in that they have fixed payment and a maturity. The depositary shares are backed by FCX preferred stock that pays a gold-dividend and held in trust with Mellon Bank. The gold indexed depositary shares paid a gold-dividend of 0.000875 ounces of gold every quarter for a fixed period of 10-years. In addition, the depositary shares paid a face value of 0.1 ounces of gold at the end of the 10-year period. Each depositary share has an initial value of 0.1 ounces of gold.

(A) Explain how the gold denominated depositary shares is really a combination of a bond that pays a fixed dollar coupon plus a sequence of gold-forward contracts.

(B) Explain how you can use the gold futures pricing equations to determine the value of the security

Reference no: EM133055848

Questions Cloud

What percentage of the project was completed by the end : Johnny wants to know how effectively the company operated during the three (3) years on this project and, What percentage of project was completed by the end
Pedigree of software from security standpoint : It is necessary to explore all of stakeholders involved within a software's development to understand the pedigree of the software from a security standpoint.
Estimate the price of the option : Suppose the price of a stock is $80. Consider a European put on the stock, expiration 10 months, riskless rate 10% per year compounded continuously, strike pric
Significant impact on businesses and industries : We have viewed how Blockchain has made a significant impact on businesses and industries.
Hybrid bonds-gold-indexed securities : (A) Explain how the gold denominated depositary shares is really a combination of a bond that pays a fixed dollar coupon plus a sequence of gold-forward contrac
How many shares of common stock were outstanding : Common stock, $11 par, 9,000 shares authorized, 1,800 shares issued and outstanding $19,800. How many shares of common stock were outstanding
Data mining principles in a data warehouse : Use appropriate tools for the operation and management of a data warehouse environment and Understanding and applying the data mining principles
Dispersed teams collaborate effectively : How do geographically dispersed teams collaborate effectively?
Define corporate governance : Define corporate governance. Define business strategy. List five possible business strategies. Define auditing.

Reviews

Write a Review

Business Management Questions & Answers

  Ensure that the acquiring of resources is conducted

If you were the manager, what measures would you put in place to ensure that the acquiring of resources is conducted in a timely manner

  Illustrate what type of reorganization has taken place

Illustrate what type of reorganization has taken place? Explain the tax consequences to Taylor Corporation, its former shareholders and Superior Corporation.

  Advent of the world wide web

How has the advent of the World Wide Web influenced the growth of contracting?

  Describe the art of negotiation in a global situation

Describe the art of negotiation in a global situation. What are the stages of negotiation and what role do styles of negotiation play.

  Define the cumulative expenditure curve

Define the Cumulative Expenditure Curve with respect to New Product Development. After that by seeing the curve of high tech product

  What is the npv on project

Blossom Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that this action will result in additional cash flows of $294,0

  Determine which promotional methods to include

What forms of interpersonal communication besides language can be used in personal selling?- How do target-market characteristics determine which promotional methods to include in a promotion mix?

  Marketing environment for starbucks

Define the marketing environment for Starbucks. Keep in mind that a company's marketing environment includes the actors and forces outside

  Based on the family medical leave act

Based on the Family Medical Leave Act (FMLA) violation you researched in this unit: Summarize the case and include an analysis of the existing issues.

  Hedge the effects of fluctuations in currency

What derivative securities can be used to hedge the effects of fluctuations in currency values on the cash flows of the firms and investors?

  What purpose does a performance appraisal serve

What purpose does a performance appraisal serve? What are some key ideas to remember when conducting a performance appraisal?

  Effectiveness of a strategic plan and improve on it

Why is it important to review effectiveness of a strategic plan and improve on it?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd