What is its value to the party paying fixed

Assignment Help Financial Management
Reference no: EM131503230

1. A stock is expected to pay a dividend of $3 in eight months. A one-year long forward contract on the stock is entered into when the stock price is $40 and the risk-free rate of interest is 10% per annum with continuous compounding. a. What are the forward price and the initial value of the forward contract? b. Six months later, the price of the stock is $45 and the risk-free interest rate is still 10%. (i) What are the forward price, and change in forward price from six months ago. (ii) Briefly describe in words what the value of the initial forward contract is. (iii) Show the appropriate equation for calculating the value of the initial forward contract and then calculate the value of the initial forward contract if forward price is $49 now.

2. The current price of palm oil is $12 per gallon. The storage costs are $0.36 per gallon per annum payable monthly in advance. Assume that the interest rates are 12% per annum with continuous compounding for all maturities. Show the appropriate equations and then calculate per gallon (a) storage cost, (b) accrued interest, (c) total carrying cost, and (d) the future price of palm oil for delivery in three months.

3. A $100 million interest rate swap has a remaining life of 10 months. Under the terms of the swap, the six-month LIBOR is exchanged semi-annually for 12% per annum. The six-month LIBOR rate in swaps of all maturities is currently 10% per annum with continuous compounding. The six-month LIBOR rate was 9.6% per annum two months ago. What is the current value of the swap to the party paying floating? What is its value to the party paying fixed?

Reference no: EM131503230

Questions Cloud

Show the firms net profit for the past year : Using accrual accounting and the preceding values, show the firm’s net profit for the past year.
Investigate smartphone and social media use in healthcare : The purpose of this assignment is to investigate smartphone and social media use in healthcare and to apply professional, ethical, and legal principles.
Cpt code system and its different categories : What is the CPT code system and its different categories? Also, explain the differences between ICD and CPT coding system. 500 words.
Contingency plan and risk analysis : Describe and distinguish between a contingency plan and risk analysis.
What is its value to the party paying fixed : What is the current value of the swap to the party paying floating? What is its value to the party paying fixed?
Equal rights proposition : Equal rights for all Americans is an issue that is closely monitored and discussed.
Design a discrete-time matched filter for the cosine signal : Design a discrete-time matched filter for cosine signal. Filter signal plus noise sequence with matched filter. At what sample value does filter output peak.
Firm has degree of operating leverage : Firm A has a Degree of Operating Leverage (DOL) of 2.0. Firm B has a DOL of 3.0.
Three different reports on the topic job analysis : The assignment required you to write THREE different reports on the topic" job analysis ". The report must cover the holistic approaches of jab analysis.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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