Increase in the foreign interest

Assignment Help Financial Management
Reference no: EM131315774

For a $1.50/£ call option with an initial premium of $0.033/£ and a phi value of –0.2, after an increase in the foreign interest (the pound sterling rate) rate from 8 percent to 9 percent, the new option premium would be A $0.035/£ B $1.48/£ C $0.031/£ D $0.032/£

Reference no: EM131315774

Questions Cloud

Industries runs a small manufacturing operation : Phillips Industries runs a small manufacturing operation. For this fiscal year, it expects real net cash flows of $205,000. The company is an ongoing operation, but it expects competitive pressures to erode its real net cash flows at 4 percent per ye..
How do you feel when people do not respond effectively : How do you feel when people do not respond effectively to you? When people respond in an ineffective manner, does it affect your speaking behavior? What can you do to help others know that they are not responding to you in an effective manner?
Annually compounded lump-sum investment with interest rate : You have your choice of two investment accounts. Investment A is a 7-year annuity that features end-of-month $1,880 payments and has an interest rate of 10 percent compounded monthly. Investment B is an annually compounded lump-sum investment with an..
Compute the after-tax two-year realized compound yield : A newly issued bond pays its coupons once a year. Its coupon rate is 5.6%, its maturity is 20 years, and its yield to maturity is 8.6%. a. Find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity o..
Increase in the foreign interest : For a $1.50/£ call option with an initial premium of $0.033/£ and a phi value of –0.2, after an increase in the foreign interest (the pound sterling rate) rate from 8 percent to 9 percent, the new option premium would be A $0.035/£ B $1.48/£ C $0.031..
Amortization of bond premium on the straight-line method : January 1, 2011, Gonzalez Corporation issued $44,511 10% 14-year bonds at 103. Gonzalez has recorded amortization of the bond premium on the straight-line method (which was not materially different from the effective-interest method).
Inflation is expected to decline steadily in the future : Assume that inflation is expected to decline steadily in the future, but that the real risk-free rate, r*, will remain constant. Which of the following statements is CORRECT, other things held constant?
Statement of retained earnings night scapes : Statement of Retained Earnings Night Scapes, Corp. began the year 2008 with $14 million in retained earnings. The firm suffered a net loss of $2.4 million in 2008 and yet paid $2.04 million to its preferred stockholders and $1.04 million to its commo..
Number of potential buyers to submit bids for mineral rights : Gus Vincent sent invitations to a number of potential buyers to submit bids for the mineral rights to his 2,000-acre parcel in upstate New York on the outskirts of the City of Hudson. Seven bids were received, including the highest bid from Internati..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Replacement analysis-replacing the wood steamer

The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer, purchased just 2 years ago, is being depreciated on a straight-line basis and has 6 years of remaining life.

  What alpha do investors in fund expect to receive

Davita Spencer is a manager at Half Dome Asset Management. She can generate an alpha of 2% a year up to $100 million. After that her skills are spread too thin, so she cannot add value, and her alpha is zero.  What alpha do investors in Davita’s fund..

  What is the company days sales in receivables

A company has net income of $181,000, a profit margin of 8.1 percent, and an accounts receivable balance of $120,370. Assuming 70 percent of sales are on credit, what is the company’s days’ sales in receivables?

  Calculate the price of a two year 106 strike european put

Calculate the price of a two-year 106-strike European put using (i) a replication argument and (ii) risk-neutral expectation.

  Company to increase its target debt ratio

Which of the following would be an incentive for a company to increase its target debt ratio? A. Corp tax rate increases. B. The personal tax rate increases. C. The company's operating leverage decreases. D. Inflation rate increases. E. The company's..

  What is the probability that a randomly selected mango

What is the probability that the 100 randomly selected apples have a mean weight less than 12.5 ounces? How many of apples have weights between 13 ounces and 15 ounces?

  Banking crisis just started-reducing availability of credit

Describe one way that a financial manager of a retail company would efficiently adjust his company’s financial management practices to each of the following changes in market conditions: (a) a big competitor enters the market; (b) technological progr..

  What is the after-tax of capital to walgreen for the bonds

The Walgreen Corporation is contemplating a new investment that it plans to finance using one-third debt. The firm can sell new $1000 par value with a 15-year maturity at a price of $948 that carry a coupon interest rate of 12.3 percent that is paid ..

  A firms overall cost of equity

A firm's overall cost of equity is:

  An investment under consideration has payback of eight years

An investment under consideration has a payback of eight years and a cost of $868,000. Assume the cash flows are conventional. If the required return is 10 percent, what is the worst-case NPV?

  Planning bond issue with an escalating coupon rate

Demand corporation is planning a bond issue with an escalating coupon rate. the annual coupon rate will be 4 percent for the first 3 years, 5 percent for the subsequent 3 years, and 6 percent for the final 3 years. if bonds of this risk are yielding ..

  Market is in equilibrium with the required return

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.00 coming 3 years from today. what is..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd