Hedgers can enter into an insurance policy, also known as a financia contract, also known as a derivative, also known as a put option to mitigate risk.
Q: The cc risk free rate r = -0.15% (yes, r ≤ 0). The spot price for TFS is So = 42.50, the cc dividend…
A: Given: cc risk free rate (r) = -0.15%(yes,r<0)S0= 42.50cc dividend rate = 8%annual volatility (σ)…
Q: How many years will it take for a uniform annual deposit of size A to have the same value as a…
A:
Q: Howard, LLC has an equity beta of 1.3. The company just paid an annual dividend of $0.30, and the…
A: Just paid dividend (D0) = $0.30 Stock price (P0) = $80 Growth rate (g) = 0.04 Cost of equity = ?
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A: Cash and liquidity are very important in the business in short term survival and long term survival…
Q: 1. What is the profit for the month when the income is $14,000 and the expenses are $12,500?
A: Profit is the amount remaining from revenue/income after deducting expenses. This is the financial…
Q: Susan bought a 18-year bond when it was issued by Octodan Corporation 2 years ago (NOTE: the bond…
A: The bonds are the units of the debt instrument issued by either the corporation or government, the…
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A: For a typical capital budgeting project, several acceptance criteria have been proposed. We have to…
Q: Problem #1. You invested $150 at the end of every month for 10 years at 7% interest compounded…
A: Monthly Investment (C) = $150 Monthly interest rate (r) = 0.00583333333333333 (i.e. 0.07 / 12)…
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A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…
Q: Ind Times -Interest-earned(TIE)
A: Times interest earned is an important leverage ratio. This ratio is also called the interest…
Q: A bank pays 6% interest compounded semiannually. Use appropriate formula to find out how much should…
A:
Q: 3 years. The semi-annual payment is Php67,173.49. From the given table below, what is the…
A: Information Provided: Semi-Annual payment = 67,173.49 Loan amount = 370,000 Annual rate = 10%…
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A: In compounding interest there is interest on interest due to which more effective interest is…
Q: What is the rebate fraction of a 36 month loan paid off after the 15th payment?
A: The formula for the calculation of rebate fraction is as follows: Rebate fraction=Sum of remaining…
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A: Calculated Value of Investment: It refers to the total present value of the investment calculated…
Q: On Brandon’s May gas bill, the present reading is 896 and the last is 784. The therm factor is…
A: A therm measures the heat content. For example, a gallon of gas contains about 125,000 BTU or 1.25…
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A: Solution:
Q: Consider a 8-year, $1,000 par, 4.5% bond that pays semi-annual coupons. What is the price of this…
A: Price of bond is the present value of coupon payment and present value off par value of bond…
Q: Problem #2 Name: Karen Brown Date 1/4 1/5 1/6 1/7 1/8 1/9 In 8:00 8:15 7:45 8:00 7:00 9:00 Out 1:00…
A: Hours worked = Out time - In time Overtime pay = regular time pay *1.5 = 12 * 1.5 = 18
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A: Solution: An amount when borrowed, it has to be repaid along with interest. So, F = P (1+i)t where,…
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A: Cost of Trade Credit: The cost of trade credit is calculated using the following formula: Cost of…
Q: your view, what is the most important prediction of the Capital Asset Pricing Model? Among the…
A: 1) Capital asset pricing model is a model used to determine the required rate of return of an asset…
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A: concept. The Sinking Fund Method:- In this method, sinking funds will accumulate for replacement…
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A: Project A Project B Project C Initial cost £ 1,75,000.00 £ 1,95,000.00 £…
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Q: Beginning inventory has 100 units. ABC Company bought 400 units during the year. They sold 450…
A: Beginning inventory = 100 units Purchase = 400 units Sale = 450 units Units available for sale = ?
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A: Given, Number of shares outstanding 3,198,000 of C CORP
Q: a. Use the appropriate formula to determine the periodic deposit. b. How much of the financial goal…
A: Solution:- When an equal amount is deposited each period at end of period, it is called ordinary…
Q: Assume you take out a $3000 loan, compounded monthly, for 2 and a half years at 8.5% APR. What is…
A: Interest The cost of borrowing an amount is called interest. Interest is paid on a regular basis at…
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A: This is a question based on the concept of time value of money, a major difference being that…
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A: Data given: pmt= $12941 period= semiannual N=9 years nper=9*2=18 FV= $ 359,268
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A: Given The periodic annuity payment is $8000 Term is 8 years Annual rate is 7% compounded semi…
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A: Sum of the years digits (SYD) method In this method, depreciation rate for each year is calculate d…
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A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…
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A: Given, Number of shares bought 200 Price per share is $50 Sale value $15000
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A: The amount of money that we deposit in banks earn interest. Usually the banks pay interest at a flat…
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A: Production opportunities refers to producing goods and services There are 4 factors of production…
Q: Assume that the real risk free rate is 2% and the average expected inflation rate is 3% for each…
A: Given, Real risk-free rate is 2% Average expected inflation rate (IP) is 3% Default risk premium…
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A: Given, Growth in wages 5% Inflation is 3.70%
Q: 26. All of the following represent cash outflows to the firm except a.Taxes. b.Interest payments.…
A: Cash outflow means that cash is moving out of the company or the business. It is the opposite of…
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A: The beta of the stack is a measure of how the stock is expected to change when there is a change in…
Q: converted quarterly. What should be Stella's quarterly deposit?
A: Information Provided: Future value = 350,000 Period = 4.5 years Interest rate = 8%
Q: Refer to the bond listing table below to determine the current bond yield for BAC.IOP. Bond Listing…
A: We have to find the current yield of a specified bond.
Q: Calculate the nominal rate of interest corresponding to each of the following 3 scenarios. Note:…
A: Nominal rate is the rate which a bank mentions or which a financial institution mentions when giving…
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A: We have to find the profit and loss, that will mostly be the profit (loss) emanating from purchase…
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A: There is need of planning for the future and if you do that on time you can achieve good results…
Q: 1.81. A loan of $10,000 is to be financed over a period of 24 months. The agency quotes a nominal…
A: Monthly payment refers to the performa of the payment that is to be made on monthly basis…
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- Writing receiver swaptions is a good interest rate risk hedge instrument for housing corparations like Vestia. TRUE OR FALSE EXPLAİN PLEASEDiscuss the advantages and disadvantages of using options to hedge as compared to using futures contracts.Describe forwards, futures, and swaps. What are the features of each type of derivative and how are these derivatives used to hedge risk or speculate?
- Explain what a “riskless hedge” is and how the riskless hedge concept is used in theBlack–Scholes OPM.Consider a security that pays income to its holders (e.g., a dividend-paying stock, or acoupon bond). Should the forward price of this security (for a contract that matures attime T), F0,T, be higher than, lower than, or equal to the security's current spot price?Why?.Derivative instruments acquired to hedge exposure may be classified as either a fair value hedge or a cash flow hedge. Discuss these two types of hedges and provide numerical examples for each.
- Explain the Use of Derivatives to Hedge Portfolio Risk?A hedger buys a futures contract, taking a long position in the wheat futures market. What are the hedger's obligations under this contract? Describe the risk that is hedged in this transaction, and give an example of someone who might enter into such an arrangement.illustrate the use of derivatives to hedge portfolio risk with an example?
- Derivatives are obtained to be used as hedging instrument to manage some kind of risk. for speculation. either to be used as hedging instrument to manage some kind of risk or for speculation. d. None of the choicesA hedger locks in a price with the final outcome of that hedge determined by the final basis. A. True B. FalseA derivative is a financial instrument whose value is derived from the underlying asset. It’s an agreement that has theability to move risk from one party to another. With this in mind, discuss the advantages associated with use of Derivativesas a financial instrument.