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Currently, the beta of a stock fund is 1.2. Suppose the fund manager wants to reduce the beta of this portfolio. Which is an effective way to achieve such goal?
A company enters into a long futures contract to buy 200 ounces of gold for $1,278 per ounce. The initial margin is $4,000 and the maintenance margin is $1,000. What gold futures price per ounce wil
How high does the stock price have to rise for an investment in options to be as profitable as an investment in the stock?
The beta of the stock is 1.4. How many futures contract does he have to purchase? If it's a short position, report a negative number.
On 6/5/2014, an investor buys 7 gold futures contracts, when the futures price is $1400 per ounce. The contract size is 100 ounces. The next day, the futures price becomes $1,396.27. Calculate the d
Suppose you invested heavily in XYZ stock. You expect its stock price may decline in the near future. Which action will hedge against this price decline risk?
An interest rate is 12.23% per annum expressed with continuous compounding. What is the equivalent rate with semiannual compounding? (margin of error: +/- 0.01%)
On January 8, 2016, a bank wants to lock in the 3-month interest rate starting on June 20, 2017. The investor buys June2017 Eurodollar futures contracts at 96.53. What is the interest rate that the
An investor has just taken a long position in a 5-month forward contract on the stock. What is the forward price?
It is April and a trader buys 100 September put options with a strike price of $21. The stock price is $17.63 and the option price is $4.74. At the expiration, the stock price becomes $18.01. Calcul
If fixed costs are 100,000 and the following chart represents the demand at various prices, what price should be charged in orger to maximize profits?
If demand falls to 73,700 units and the company wants to continue to earn a 0.31 return, what price should the company charge.
Alternatively, the keyboards could be sold "as is " for 7300. What is the net advantage or disadvantage of re-working the keyboards?
Highway Express has paid annual dividends of $1.05, $1.20, $1.25, $1.15, and $0.95 over the past five years, respectively. What is the average dividend growth rate?
Bayside will pay a dividend on common stock of $4.80 per share at the end of the year. The required return on common stock (Ke) is 13.2%. The firm has a constant growth rate of 7.2%. Compute the cur
The aftertax cost of debt is 9%, the cost of preferred stock is 12% and the cost of common equity (in form of retained earnings) is 14%. Calculate the weighted average cost of captial. Please show t
Suco co needs $800,000 to develop a plant. It issues a $1,000 par value bond with a coupon rate of 12 percent and 15 years maturity. The investors rate of return of 12 percent.
Describe the learning condition you think is most necessary for learning to occur. Use specific examples to support your answer. Your response should be at least 250 words in length.
The use of the equipment will have no effect on revenues, but it is expected to save the firm $50,000 per year in before-tax operating costs. Your company's marginal tax rate is 35%. What is the inc
Jackson Company is considering two capital investment proposals. Estimates regarding each project are provided below.
The firm estimates its after-tax cost of debt to be 6%, cost of preferred stock to be 8%, and cost of new common stock to be 15%. What is the weighted average cost of capital?
What is the maximum initial purchase that Carla can make given this credit approval? (Hint: interest compounded monthly) A. $1,288.90 B. $1,300.00 C. $1,331.42 D. $1,350.00 E. $1,428.46
Your firm's offer consists of weekly payments for one year at an interest rate of 3 percent. What is the amount of each weekly payment?
How many play exactly one of the four sports? How many play only soccer? How many play only hocley? How many play all four sports?