What is the fair forward price of five-year forward

Assignment Help Financial Management
Reference no: EM131904184

If Apple costs $130 today, interest rates are 10%, and Apple pays a $3 dividend every year, what is the fair forward price of a five-year forward?

What would the fair forward price be if Apple’s stock price goes up to $150?

For the IBM example: ($100 IBM price today, 2 year forward, 10% interest rates, $5 dividend per year), suppose you bought the forward at the fair forward price of $110.5. Now IBM falls to $80. You want to get out. What is the most you would pay to get out of your forward contract struck at $110.5?

Reference no: EM131904184

Questions Cloud

Think about cash flows in two different years : Suppose you face an investment decision in which you must think about cash flows in two different years.
What is the current price of this stock : what should the exchange rate be five years from now? what is the current price of this stock?
Mirr of the project using combination approach : Calculate the MIRR of the project using the reinvestment approach. Calculate the MIRR of the project using the combination approach.
What is the net present value of rebuilding the asset : What is the net present value of rebuilding the asset? Suppose the firm is all equity financed. Will shareholders rebuild the asset in the event of a loss?
What is the fair forward price of five-year forward : If Apple costs $130 today, interest rates are 10%, and Apple pays a $3 dividend every year, what is the fair forward price of a five-year forward?
What was the capital gain yield for the year : If price of this stock climbed to $52 at the end of the year, what was the capital gain yield for the year?
What is the market risk premium-equity risk premium : Assume the nominal risk-free rate is 4.00%, What is the market risk premium? What is the equity risk premium?
Contemplating leasing diagnostic scanner : You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner. Calculate the NAL.
Determine terminal year after-tax non-operating cash flow : Calculate the initial outlay of the project. Determine the terminal year (in year 4) after-tax non-operating cash flow.

Reviews

Write a Review

Financial Management Questions & Answers

  What was their dividend per share

if the company has 100000 share outstanding, what was their dividend per share?

  The bond is selling at a premium

If the value of a bond B0 is less than its par value, the bond is selling at a premium. The yield to maturity on a bond with a current price equal to its par value will always equal the coupon interest rate. A bond that is issued at a premium has a c..

  Lump sum today will be equivalent to future annual payments

What lump sum today will be equivalent to the future annual payments?

  After consulting various sources-what is the value of firm

You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.6, a debt-to-equity ratio of .5, and a tax rate of 30 percent. Assume a risk-free rate of 6 percent a..

  How are employer-employee disputes settled

How are employer-employee disputes settled? If the employer-employee disputes are not settled at the company level, what can they do?

  What is the firm market capitalization

What is the firm’s Market Capitalization? What is the cost of the preferred stock? What is the cost of the common stock?

  How much should the group borrow

The Omega Venture Group needs to borrow to Finance a project. Repayment of the loan involves payments of $5660 at the end of every six months for six years. No payments are to be made during the development period of two years. Interest is 9% compoun..

  What are the social and ethical criticisms of advertising

What does the Food and Drug Administration have jurisdiction over? What are the two important considerations marketers must take in developing contests and sweepstakes? What are the social and ethical criticisms of advertising? What types of ads do c..

  CAPM-generated expectations of performance

explain how each stock in the portfolio performed relative to those CAPM-generated expectations of performance. What factors could explain these differences?

  Define total debt to tangible net worth

Define Working Capital and how you calculate. Define Total Debt to Tangible Net Worth and how you calculate. Define Total Debt to Effective Tangible Net Worth and how you calculate. What is PMSI and how is it different from a standard security intere..

  Using economic order quantity model in placing the orders

Cheesburger and Taco Company purchases 6,441 boxes of cheese each year. It costs $27 to place and ship each order and $9.92 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders.

  Profitability and asset management ratios

Profitability and Asset Management Ratios You are thinking of investing in Tikki's Torches, Inc. You have only the following information on the firm at year-end 2008: net income = $690,000, total debt = $13.9 million, debt ratio = 44%. What is Tikki'..

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