please answer the following in at least 500 words 1) Describe the life span of a transaction exposure 2)The evidence is that practitioners do not hedge 100% of the time. They hedge about 70% and their great preference is the forward market. Elaborate on the implications of these facts.
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please answer the following in at least 500 words
1) Describe the life span of a transaction exposure
2)The evidence is that practitioners do not hedge 100% of the time. They hedge about 70% and their great preference is the forward market. Elaborate on the implications of these facts.
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- How is AIC currently valued in the stock market? (under, over, fairly) Your firm's client makes her investment decisions based on research report and requires 30% margin safety. What would be her investment decision if AIC price falls to $40?which is the correct answer and why? I think it's c. Relative to a passive investor who holds securities for a long time, all of the following statements about an active investor who frequently buys and sells securities are correct EXCEPT ____. Group of answer choices a. The active investor must pay greater total annual commission to security brokers b. The active investor must pay greater total annual tax to the government c. The active investor must earn greater net annual investment return, where net return is defines as return net of various transaction costs, fees and taxes d. The active investor must pay greater total annual bid-ask spread to security dealersMCQs Just Required Correct Answers. 1- The amount which borrower has to pay to lender for taking and using his amount on total amount accumulated is called as _____________. a. Real rate of interestb. Nominal interest ratec. Nominal risk free interest rated. Compound interest 2- During the financial year 2019-20 OGDCL has earned huge profits and they have surplus funds available for making new investments. The top management after detailed discussion and analysis has decided to purchase the share of Hascol Company Ltd in a recent IPO. This decision of the management is called as ____________. a. Asset Management Decisionb. Investment Decisionc. Financing Decisiond. Equity Investment Decision 3- Which of the following DOES NOT belong to Over the Counter (OTC) market?a. Mostly Unlisted securities are tradedb. Network of dealersc. Less Participation of general publicd. No physical Location 4- Which of the following DOES NOT truly represent the characteristics of the…
- Which of the following statements are false? Select all that apply a. Liquidity ratios are used to measure the speed with which various accounts are converted into sales. b. When ratios of different years are being compared, inflation should be taken into consideration c. Return on total assets (ROA) is sometimes called return on investment d. Generally, inventory is concerned with the most liquid asset that a firm possesses. e. A P/E ratio of 20 indicates that investors are willing to pay $20 for each $1 of earnings.Lois selects securities to invest in after carefully examining the fundamentals of a company, using the accounting statements in its annual reports. Peter seeks to earn abnormal returns solely by studying stock price charts and investing based on the patterns he finds in the past prices. Which one of the following statements is correct?a. If Lois earns abnormal returns this violates weak-form market efficiency. If Peter earns abnormal returns this violates strong-form market efficiency.b. If Lois earns abnormal returns this violates strong-form market efficiency. If Peter earns abnormal returns this violates weak-form market efficiency.c. If Lois earns abnormal returns this violates semi-strong form market efficiency. If Peterearns abnormal returns this violates strong-form market efficiency.d. If Lois earns abnormal returns this violates semi-strong form market efficiency. If Peterearns abnormal returns this violates weak-form market efficiency.e. If Peter and Lois both earn abnormal…Suppose you had the following propositions of returns from two companies W and Y: Company Returns (OMR) Comments W 475 Company W proposes to give OMR 475 today Y 550 Company Y proposes to give you OMR 550 but after 2 years You also know that the Interest Rate is by 10%. Question: In which company do you choose to invest your money and why? (Use two formulas (ways) and also use Tables to make sure your answers are correct).
- You have been asked by your employers to demonstrate your knowledge in business valuation process, by analyzing the value of Best Group Savings and Loans Company (BGSLC). The company paid a dividend of GH¢ 250,000 this year. The current return to shareholders of companies in the same industry as BGSLC is 12%, although it is expected that an additional risk premium of 2% will be applicable to BGSLC, being a smaller and unquoted company. Compute the expected valuation of BGSLC, if: The current level of dividend is expected to continue into the foreseeable future The dividend is expected to grow at a rate 4% par into foreseeable future The dividend is expected to grow at a 3% rate for three years and 2% afterwardsK-Life financial services Limited uses risk-adjusted return on capital (RAROC) to measure performance on several aspects. In this regard, imagine that an investment officer wants to execute a transaction with the following characteristics: Probability of default (PD) = 30 basis points Loss given default (LGD) = 55% Exposure at default (EAD) = K 1.45 million Expected loss (EL) = K 2,750 This is a loan to a company in the Agro industrial. The firm’s economic capital (EC) model is based on the 99% confidence level, with an average standard deviation of 2.15%. The risk-free rate of return is 6%. Assume that the bank has set a RAROC hurdle rate of 15% and this transaction has a net profit of K10, 500. REQUIRED: Compute the K-life’s risk-adjusted rate of return on this transaction. Now assume that K-life could also have made a loan for the same amount to a firm in the service industry, and that the standard deviation for economic capital purposes in this case is 1.29%. Compute the bank’s…Peter Lynch is one of the most successful active investor who has generated an average return of more than 25% per year over a period of one and a half decades, which has outperformed the stock market of 12% many times over.(a) Judge the relevance of the efficient market hypothesis in Peter Lynch’s case. Your answer should not exceed 200 words.(b) Discuss your investment strategy assuming the efficient market hypothesis holds true. Your answer should not exceed 200 words.
- Question: Financial decisions often place heavier emphasis on one type of financial statement over the others. Consider each of the following hypothetical situations independently. An investor is considering purchasing common stock of the 24/7 Fitness The investor plans to hold the investment for at least 3 years. Xerox is considering extending credit to a new customer. The terms of the credit would require the customer to pay within 60 days of receipt of goods. The president of American Airlines is trying to determine whether the company is generating enough cash to increase the amount of dividends paid to investors in this and future years, and still have enough cash to buy new flight equipment as it is needed. PNC Bank is considering extending a loan to a small company. The company would be required to make interest payments at the end of each year for 5 years, and to repay the loan at the end of the fifth year. Instructions In each of the situations above, state whether the…What are the major classes of securities sold by the Firm? Explain your answer with example. (Word Limit- 300 to 500 words) How do firms make initial public offerings and what are the costs of such offerings? (Word Limit- 300 to 500 words)this is the first part of my question which I managed to solve but you are gonna need it to solve the second part which I NEED HELP in. Model the following investment decision as an Influence Diagram: a high-risk stock - $200 brokerage fee Payoff- $1700 if the market goes up $300 if market stays neutral -$800 if the market goes down a low-risk stock - $200 brokerage fee Payoff- $1200 if the market goes up $400 if market stays neutral $100 if the market goes down Student 1 hour ago a savings account that pays a sure $500 P(Market Up)=0.480, P(Market Flat) = 0.297, and P(Market Down) = 1-P(Market Up)-P(Market Flat). Student 1 hour ago
