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Suppose you purchased 500 shares of the Fidelity Nasdaq Composite Index Tracking Stock (ticker = ONEQ) on January 1 at $50 each. On March 1 the price reached $60, and you became nervous at having earned a large return in two months. Rather than sell your shares, you decide to hedge by selling June E-mini NASDAQ composite futures contracts (multiplier = 20), which settled at 1,508 on March 1.
Since the tracking stock and futures are on the same asset, the beta is 1 and the hedge ratio is: HR = INT(((500*60) / (20*1,508))*1) = 1 When the contract settles in June, the ONEQ shares are selling for $45 and the futures for 1,105. Calculate the profit on the stock and the futures from March 1 to the settle day in June
Largest institutions acquiring smaller local and regional banks
Everest, Inc.'s preferred stock has a par value of $1,000 and a dividend equal to 13.0% of the par value. The stock is currently selling for $907.00.
Grullon Corporation is considering a 7-for-3 stock split. The current stock price is $67.50 per share, & company believes that its total market value would increase by 5 percent as a result of the improved liquidity that should follow the split.
What are the portfolio weights for a portfolio that has 165 shares of Stock A that sell for $90 per share and 140 shares of Stock B that sell for $106 per share? (Round your answers to 4 decimal places (e.g., 32.1616).)
Fama's Llamas has a weighted average cost of capitalof 9.8 percent. The company's cost of equity is 13 percent, and its cost of debt is 6.5 percent. The tax rate is 35 percent. What is Fama's debt-equity ratio?
What is the expected value of the cash flow? (Omit the "tiny_mce_markerquot; sign in your response.)
Capital Budgeting in Not-for-Profit-Entities. Are the capital budgeting criteria we discussed applicable to not for profit corporations? How should such entities make capital budgeting decisions?
How are sales & loans used as lifetime tranfer tools in estate planning? What are the reasons/advantages and threats/disadvantes of using these tools?
Although Eco's current target capital structure includes 20% preferred stock, the company is considering using debt financing to retire the outstanding preferred stock, thus shifting their target capital structure to 50% long term debt and 50% com..
Computation of the incremental free cash flow for the first year of the new project and Use of the equipment will require an increase in your company's net working capital
What is a FAIR plan? How does it work? If underwriting losses of FAIR plans are passed on to other insureds, is this mandated subsidization? Explain your conclusions.
You are trying to assess the value of a small retail store that is up for sale. The store generated cash flow to it owner of $100,000 in the most profitable year of operation and is expected to have growth of about 5 percent a year in perpetuity.
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