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Use the answer to Problem and put-call parity arguments to calculate the price of a put option that has the same terms as the call option in Problem.
Problem :Suppose that a = 0:05, b = 0:08, and σ = 0:015 in Vasicek's model with the initial short-term interest rate being 6%. Calculate the price of a 2.1-year European call option on a bond that will mature in 3 years.
Suppose that the bond pays a coupon of 5% semiannually. The principal of the bond is 100 and the strike price of the option is 99. The strike price is the cash price (not the quoted price) that will be paid for the bond.
A firms reports that in a certain year it had a net income of 4.5 million, depreciation expenses of 2.8 million, capital expenditures of 2.3 million, and Net Working Capital decreased by 1.5 million.
- what is the capital structure decision?- how is the market value of a company affected by its capital structure?- how
A Japanese company has a bond outstanding that sells for 94 percent of its ?100,000 par value. The bond has a coupon rate of 5.30 percent paid annually and matures in 15 years.
Barnette Inc.'s free cash flows are expected to be unstable during the next few years while the company undergoes restructuring. However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million
Consider a cumulative scheduling problem with four jobs- Apply the edge-finding rules and update the bounds accordingly.
Compute the future value in year 8 of a $4,100 deposit in year 1 and another $3,600 deposit at the end of year 3 using a 10 percent interest rate.
Bond P is a premium bond with a 12 percent coupon. Bond D is a 7 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 9 percent, and have seven years to maturity.
The finished goods inventory on hand at the end of each month must be equal to 8,000 units plus 30% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 20,600 units.
You want to by a boat and can afford payments of $350 per month for six years. The annual interest rate is 7% compounded monthly.
Consider two firms, With and Without, that have identical assets that generate identical cash flows. Without is an all-equity firm, with 1 million shares outstanding that trade for a price of $24 per share.
the following data relate ti inventory for the year ended December 31, 2011. A physical inventory on December 31,2011, indicates that 600 units are on hand that they came from the July 1 purchase.
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,120,000 and will be sold for $1,320,000 at the end of the project.
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