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Suppose you purchased 500 shares of the Fidelity Nasdaq Composite Index Tracking Stock (ticker = ONEQ) on January 1 at $50 each. On March 1 the price reached $60, and you became nervous at having earned a large return in two months. Rather than sell your shares, you decide to hedge by selling June E-mini NASDAQ composite futures contracts (multiplier = 20), which settled at 1,508 on March 1.
Since the tracking stock and futures are on the same asset, the beta is 1 and the hedge ratio is: HR = INT(((500*60) / (20*1,508))*1) = 1 When the contract settles in June, the ONEQ shares are selling for $45 and the futures for 1,105. Calculate the profit on the stock and the futures from March 1 to the settle day in June
Calculation of operating cash flows and what were the firm's earnings before taxes
Company's bonds have a 10% coupon rate with semi-annual coupon payments. They have 12 and 1/2 years to maturity and a par value of $1,000. Compute the value of Swanson's bonds if investors' required rate or return is 8%. Please show work!
As a potential borrower, you decide to compare their effective annual rates. First National Bank's business loans have an EAR of percent, whereas First United Bank's loans have an EAR of percent.
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You bought Chemtron stock for $45 a year ago. It is selling for $54 today. What is your holding period return?
it makes no coupon payments over the life of the bond. The required return on both these bonds is 10 percent compounded semiannually.
The price of a December put futures option is quoted as 5-52. Each Treasury bond futures contract is for delivery of $100,000 in Treasury bonds. What is the cost of one contract?
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