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We will compare the relative performance of shares, futures and options during the week of April 7-11. Implement the following four transactions on Monday –1) Buy 500 shares of S&P500 tracking ETF SPY2) Buy 2 June futures contract for S&P 500 (Globex)3) Buy 5 calls for SPY expiring on last available date in June 2014 at a strike price of 190. 4) Buy 5 puts for SPY expiring on last available date in June 2014 at a strike price of 190.On Friday, reverse the above transactions or sell off all the above shares, futures and options in your account.Tabulate the payment for entering into the transaction, the investment required, the dollar profit /loss and the return for each of the transactions. Comment on the relative investment required and the relative return for the transactions. StockTrak Assignment 5We are going to analyze the returns of firms with different Price-to-earnings (PE) ratios. Identify an industry and two firms in it with different PE ratios. You should be able to use research feature on Stocktrak or on any of the popular websites like finance pages on Google.com, Yahoo.com, msn.com. Firm 1 should ideally have the highest PE ratio in its industry and Firm 2 should have the lowest PE ratio in the same industry. Buy 100 shares of each firm. Document the NAICS code(s), PE ratio as well as the beta of the two firms.List the returns of the two firms for the period March 31 – April 4. Using S&P 500 as the market portfolio, calculate the “alphas” of the two firms for the week using the CAPM model. Comment on the relation between the PE ratio, beta and alphas.
It also negotiates a 7% increase with managed-care plan #1. Assuming all other factors are unchanged, what is the new required price?
A firm is 40% financed by risk-free debt. The interest rate is 10 percent, the expected market risk premium is 8 percent, and the beta of the company's stock is .5.
Assume that the Treasury sold a $100,000, 30 year bond exactly twenty two years ago. That bond carried a coupon rate of 10.5%. Also assume that today Treasury security maturing in the five to ten year period yield 2.0%. How much would that 22 year..
For the following income statement and balance sheet, fill in the missing data for the calendar year ending December 31.
On the first day of the fiscal year, a firm issues a $1,000,000, 8 percent five year bond that pays semi-annual interest of $40,000, receiving cash of $884,171.
Smeagal Industries is considering a new division, making pixie dust in a handy resealable pouch. THey intend to finance it with 60% equity, and 40 risk-free debt. They have identified the following comparison firm, and corresponding equity beta an..
Supposing that the retirement benefit is the only consideration in making retirement decision, should Ms. Pena accept her employer's offer? Identify the factors which cause the present value of retirement benefits to be less then $500,000.
A large food processor and distributor is considering expansion into a chain of privately owned sports shoe outlets
Your firm has cash of $1,600, accounts receivable of $2,500, inventory of $1,900, and net working capital of $500.
Determine the investment's net present value, the internal rate of return, payback period and the discounted payback period. All key assumptions should be specified and explained and an interpretation provided of results for each of the investment cr..
Suppose that the risk free rate of interest is 3 percent and the expected rate of return on the market is 9 percent. A share of stock is selling for $55 at the beginning of the year.
What is the most important segment of a cash flow statement? Why? Can the cash flow statement be manipulated? If so, how? If not, why not? Are most investors sophisticated enough to interpret a cash flow statement? Should they be?
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