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Question: A fund manager has a portfolio worth $50 million with a beta of 0.87. The manager is concerned about the performance of the market over the next two months and plans to use three-month futures contracts on a well-diversified index to hedge its risk. The current level of the index is 4450, one contract is on 50 times the index, the risk-free rate is 6% per annum, and the dividend yield on the index is 3% per annum. The current 3-month futures price is 4517.
What position should the fund manager take to eliminate all exposure to the market over the next two months? Calculate the effect of your strategy on the fund manager's returns if the level of the market in two months is 4005. Assume that the one-month futures price is 4015 at this time.
2. A stock's next expected dividend divided by the current stock price is the:
Wells Fargo issues a CMBS. The mortgage pool consists of interest only loans, with a total loan amount of $15 million. Assume the mortgage rate is 11%, the mortgages are annually compounded, and the loan maturity is 4 years.
You will need a figure for the current Treasury bill rate. You can find this also on finance.yahoo.com by clicking on Bonds-Rates. Assume for your estimates a market risk premium of 7%.
A portfolio of derivatives (calls) on a stock has delta of 2400 and a gamma of -100.
Their home has been appraised at $110,000, and Eldridge permits a customer to use no more than 70 percent of the appraised value of a home as a borrowing base.
a medium size firm is considering the issuance of additional long-term debt to finance expansion. at the present time
The interest rate on the loan was 12 percent compounded monthly. You have just made the 120th payment. What is the principal outstanding?
What does it suggest your strengths and weaknesses are as a project manager? How can you compensate for your weaknesses?
Many are skeptical because they feel this move corners business and doesn't allow for diversity, will investors take a hit with Symantec narrowing its operations?
The Retail Outlet has 6,000 shares of stock outstanding with a par value of $1 per share. The current market value of the firm is $120,000.
What factors should First State take into account as it plans its own Web page and Internet service menu? How can the bank effectively differentiate.
a company is considering creating and selling a new soda. create a report explaining the research process that should
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