How is an income statement used by a new business?
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Both are the same question one is just a screenshot
Question Both are the same question one is just a screenshot of the question with the information you need…… ATTACHMENT PREVIEW Download attachment Screen Shot 2019-08-01 at 4.53.33 PM.png 1. Two investors agree to a swap agreement on a notational $8,000,000 in which Steve will pay the return on a portfolio of financial stocks while Barry will pay the return on a portfolio of technology stocks. Determine the net cash flow (and who pays it) in each year under this swap agreement: Financial Technology Year Stock Return Stock Return 2020 7% 12% 2021 -4% 3% 2022 2% 0% 2023 -5% -14%
2. Options can protect a firm against the downside risk
Question 2. Options can protect a firm against the downside risk of a business transaction while preserving the upside potential from the transaction. In contrast, futures contracts normally protect against the downside risk but forfeit the upside potential. Why then don’t firms always use options to hedge their risks instead of futures contracts?
3. You are considering buying a call option for Bernie
Question 3. You are considering buying a call option for Bernie Bros, a company that is building a series of assisted living homes for aging hippies. Bernie Bros current stock price is $42.20, and the call option you are looking at sells for $5.85 with a $40.00 strike price and six months to expiration. a. What is the intrinsic value of this option today? b. What is the premium of this option today? c. Draw a payoff graph for this option with the stock price at expiration on the x axis. Plot the payoffs for both the buyer and the seller of this call option. d. If the perceived future volatility of the shares of Bernie Bros was to decrease, what would happen to the price of this option? e. If you decided you wanted to buy a one-year option instead of the six month, would it cost you more or less? Why?
4. Use the concept of put-call parity to answer the
Question 4. Use the concept of put-call parity to answer the following: a. A stock trades for $42 and has a put that expires in one year with a $40 strike price which trades at $4.50. If the risk free rate is 4%, what is the current value of a $40 call with a one year expiration? b. A stock has one year, $130 strike price options that currently cost $6.13 for calls and $7.84 for puts. If the risk free rate is 5%, what is the current price of the stock?
5. What is a straddle, and why would an investor
Question 5. What is a straddle, and why would an investor choose to buy one? Assume an investor buys a $21 straddle on Macy’s. At what stock prices at expiration will that position be profitable? Assume at expiration Macy’s sells for $14: what will the % return be on the straddle? How much $ profit or loss will the investor earn per share?
6. Assume a different investor is bullish on Macy’s and
Question 6. Assume a different investor is bullish on Macy’s and is considering the following three potential investments. If at option expiration in January the stock price is $27.50, what will the return be (% and $ per share) for each choice: a. Just buying the stock at $22.68. b. Just buying the $23 call. c. Buying a bull spread using the $23 and $26 contracts.USE THE CHART TO ANSWER THE QUESTION……. ATTACHMENT PREVIEW Download attachment Screen Shot 2019-08-01 at 4.58.56 PM.png Macy’s currently trades at $22.68. Below are the options currently listed on Macy’s with January 2020 expirations. In answering the questions, if you need to buy an option assume you need to pay the relevant ask price, and if you need to sell an option assume you receive the relevant bid price. January, 2020 Expires January 17, 2020 In the Money Calls Puts Last Change Bid Ask Volume Opan Int Strike Last Change Bid Ask Volume Open Int 9.65 1370 11.00 0.16 0101 0.16 956 8.65 12.70 12.00 0.12 0.02 0.22 0 397 750 8.55 910 14.00 0 20 0.18 022 3930 5.80 5.80 700 1600 0.44 1.13 038 0142 2079 5.55 -0.84 595 1 1311 1700 0.57 054 0.57 20 2919 4.43 013 1.35 1.45 129 19 00 1/01 0.10 1.01 1.04 270 0,47 3,00 310 10 3564 2100 173 1.13 1,71 1,77 2109 Last Trade as of 07/31/19 17:28 PM ET 2.0 #0.20 1.98 2.04 20 1007 23.00 2.78 #0.14 2.69 2.75 1.61 1.56 1.62 36475 24.00 2.90 3.25 3.35 325 0.96 #0.06 0.95 0.9 838 26.00 4.50 4.65 4.75 O 64 0.54 0.54 0.57 451 28.00 6.24 6.20 5.35 16 274 0.41 0.42 0.4. 202 29.00 810 205 7.20 105 0.28 0.21 25 58 31.00 920 8.70 9705 0.11 0.15 10.19 14 32.00 10.80 9.80 44 0.11 0.15 33.00 -0.53 10.35 10.95 472 0105 0.04 0.24 34.00 11.85 11.50 12.50 20 37 0.03 0.01 023 146 36.00 1430 13.30 14.30 12Read more
What is the purpose of a balance sheet and statement
Question What is the purpose of a balance sheet and statement of revenue and expenses?
Describe how the payback period is calculated and describe the
Question Describe how the payback period is calculated and describe the information this measure provides about a sequence of cash flows. What is the payback criterion decision rule? What are the problems associated with using the payback period as a means of evaluating cash flows? What are the advantages of using the payback period to evaluate cash flows?
how do investors used business cycle? What are the implications
Question how do investors used business cycle? What are the implications of business cycle for security analysis?
how do investors used Fair Value Accounting? style=”color:rgb(5,5,5);”>What are the
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What is the yield to maturity of a ten-year, $1000
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Watch the video titled “60 Minutes – Inside the Financial
Question Watch the video titled “60 Minutes – Inside the Financial Crash” found at: https://www.youtube.com/watch?v=FMt_ZczGmEU. After watching the video, discuss how this financial crash impacted you, your family, a career you may have been laid-off from, and/or someone you know that was affected?
What are the basic elements of a cash flow statement
Question What are the basic elements of a cash flow statement for an entrepreneurial business?
Drinkable water systems is analyzing a project with projected cash
Question Drinkable water systems is analyzing a project with projected cash inflows of $127,400, $209,300 and -$46,000 for Years 1 to 3, respectively. The project costs $251,000 and has been assigned a discount rate of 12.5 percent. Should this project be accepted based on the discounting approach to the modified internal rate of return? Why or why not?
A project has cash flows of -$148,400, $42,500, $82,300, and
Question A project has cash flows of -$148,400, $42,500, $82,300, and $46,200 for Years 0 to 3, respectively. The required rate of return is 10 percent. Based on the internal rate of return of _____ percent for this project, you should _____ the project.A. 8.03; acceptB. 7.48; rejectC. 7.48; acceptD. 7.91; acceptE. 8.03; reject
A project has cash flows of -$108,000, $52,800, $51,200, and
Question A project has cash flows of -$108,000, $52,800, $51,200, and $67,100 for Years 0 to 3, respectively. The required payback period is two years. Based on the payback period of _____ years for this project, you should _____ the project.A. 2.06; rejectB. 1.79; rejectC. 1.98; acceptD. 2.21; acceptE. 2.02; reject
Why is break-even analysis so important to a new business?
Question Why is break-even analysis so important to a new business?
Assume an investment has cash flows of −$39,700, $22,750, $16,500,
Question Assume an investment has cash flows of −$39,700, $22,750, $16,500, and $11,500 for Years 0 to 3, respectively. What is the NPV if the required return is 12.6 percent? Should the project be accepted or rejected?A. $2,276.89; acceptB. $1,684.22; rejectC. $1,573.47; acceptD. $1,684.22; acceptE. $1,573.47; reject
You are analyzing a proposal to build a new facility.
Question You are analyzing a proposal to build a new facility. Cost of capital of is 14%, a capital gains tax rate of 5%, and an income tax rate of 40%.Land for the factory will be purchased today for $500. At the beginning of the second year (1 year from today), $1,000 will be spent for the construction of the building. The equipment will be purchased at the beginning of the third year at a cost of $1,500. Operations will begin at the beginning of the fourth year, at which time a working capital investment of $500 will be required. Cash flows from operations will occur for 10 years and will be received at the end of each year.The building construction cost and the equipment will be depreciated on a straight-line basis, with zero expected salvage for each. Assume that you can’t depreciate the building and equipment until you use them in operations. After 10 years of operation, you expect to sell the land for $600.Annual incremental revenue will be $2,000 for the first 5 years of operation, and $2,250 for the last 5 years of operation. Fixed operating costs (excluding depreciation) will be $300 each year. Annual variable operating costs will be 25% of annual revenue.The building and equipment both qualify for a 10% investment tax credit that can be received at the time each is purchased. This ITC will not affect the amount you can depreciate.a. Calculate the NPV for this project.b. Calculate the IRR for this project, to 2 decimals, like 25.63%.
This question was created from Ch 20 HW Answer Key
Question This question was created from Ch 20 HW Answer Key https://www..com/file/7517763/Ch-20-HW-Answer-Key/ Could you write answer in the box. Just answer (not how to solve). ATTACHMENT PREVIEW Download attachment 7517763-332514.jpeg 4. The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $130 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $130 is $11.10. a. If the risk-free interest rate is 9% per year. what must be the price of a 3—month call option on C.A.L.L. stock at an exercise price of $130 if it is at the money? {The stock pays no dividends.) Price of a 3—month call option $ b-What would be a simple options strategy using a put and a call to exploit your 1.conviction about the stock price’s future movement? Stock prioe’s future movement Sell a straddle ZWhat is the most money you can make on this position? Amount $ 2: How far can the stock price move in either direction before you lose money? Stock prioe 35 c. How can you create a position involving a put. a call, and risk less lending that would have the same payoff structure as the stock at expiration? What is the net cost of establishing that position now? Position Immediate CF CF in 3 months 31 5 X ST
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