User Account

All Pages

What is the p-l of the hedge fund

Assignment Help Finance Basics
Reference no: EM133076500

Consider a hedge fundWhat is the leverage, and gross and net leverage of the hedge fund? With $38 million in net asset value (NAV) has taken a $100 million long position in ABC Inc. and a $100 million short position in XYZ Inc. Both positions were opened at $50 per share and both have a 15% margin requirement. Both share prices increase over the next year, with ABC share trading at $55 while the share price of XYZ jumps to $60. Assume that the bank lending rate is 2.00%, the risk free rate on excess cash is 1.75%, the additional debit spread on financing the long positions is 0.25%, and the lending fee (i.e., stock borrow spread) at 0.75% on the short positions.

What is the P&L (profit and loss) of the hedge fund over the year?

What is the change in margin required for the hedge fund? And does it have enough cash to cover this margin? If not, what must the hedge fund do?

Reference no: EM133076500

Questions Cloud

Black-scholes model to value the call option : The current price of Cochlear Limited stock is $200. The standard deviation is 22.3% a year, and the interest rate is 21% a year. A one-year call option on Coch
Improve company performance and long term sustainability : Big data analytics (BDA) is able to improve company's performance and long term sustainability. Discuss
About systems of equations : You learned about systems of equations. These are two or more linear equations, which may be simultaneously evaluated for the common solution.
Main concerns of business finance : What are the three main concerns of Business Finance? Briefly explain all the three.
What is the p-l of the hedge fund : What is the P&L (profit and loss) of the hedge fund over the year?
Cybersecurity policy effectiveness : Discuss how you would evaluate the effectiveness of the Social Engineering policy addressed below in terms of achieving its objectives.
Formulate the quoted and effective interest rates : Formulate the quoted and effective interest rates that Bugis Bank should set if it wants to match Raffles Bank, assuming a 5-years horizon period.
Wealth purification in islamic wealth planning : Explain the importance of spending in the context of wealth purification in Islamic wealth planning. [Essay format, minimum 1 page]
What is the payback? period : The sign will cost $4 000 and will be posted for one year. You expect that it will generate additional revenue of $720 a month. What is the payback? period?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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