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compute variables

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Why compute variables such as gender parents education, height? does it make a difference to compute or not?

 
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A collar is established by buying a share of stock for $62, buying a six-month put option with exercise price $55,

and writing a six-month call option with exercise price $65. Based on the volatility of the stock, you calculate that for an exercise price of $55 and maturity of six months, N(d1) = 0.7147, whereas for the exercise price of $65, N(d1) = 0.6555. 

What will be the gain or loss on the collar if the stock price increases by $1? (Input the amount as a positive value. Round your answer to 3 decimal places.)

(Click to select)Loss/Gain of ______$ 

 
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A collar is established by buying a share of stock for $53, buying a six-month put option with exercise price $46,

and writing a six-month call option with exercise price $58. Based on the volatility of the stock, you calculate that for an exercise price of $46 and maturity of six months, N(d1) = 0.7378, whereas for the exercise price of $58, N(d1) = 0.6572. 

What will be the gain or loss on the collar if the stock price increases by $1? (Input the amount as a positive value. Round your answer to 3 decimal places.)

(Click to select)LossGain of $

 
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value balance sheets

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Here are book- and market-value balance sheets for the United Frypan Company:

Book-Value Balance Sheet

Net working capital $30 Debt $80

Long term assets $70 Equity $20

________ ___________

$100 $100

Market-Value Balance Sheet

Net working capital $30 Debt $80

Long term assets $170 Equity $120

__________ ____________

$200 $200

Assume that MM’s theory holds except for taxes. There is no growth, and the $80 of debt is expected to be permanent. Assume a 32% corporate tax rate.

a) How much of the firm’s market value is accounted for by the debt-generated tax shield?

b) What is United Frypan’s after-tax WACC if r debt =6.5% and r equity = 16.5%?

c) Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be the new value of the firm, others things equal? Assume a borrowing rate of 6.5%.

 
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