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Suppose you are given the following SDE for the instantaneous spot rate:drt = σr1dWt,where the Wt is a Wiener process under the real-world probability and the σ is a constant volatility. The initial spot rate r0 is known to be 5%.
(a) What does this spot rate dynamics imply?
(b) Obtain a PDE for a default-free discount bond price B(t, T) under these conditions.
(c) Can you determine the solution to this PDE?
(d) What is the market price of interest rate risk? Can you interpret its sign?
If the firm intends to issue new shares to finance the project, how many shares must the firm issue?
What if interest rates on the 10 percent loan go up to 15 % in the second year and 18% in the third year? What would be the total interest cost compared to the 12%, three year loan?
Which of the following risks would be classified as a unique risk for an auto manufacturer? a.Interest rates b.Business cycles c.Steel prices d.Foreign exchange rates
1. a degree program costs 50000 in total expenses 30000 in tuition and 20000 in housing and books. the us government
Explain Valuation of perpetual Bond and In what respect is a perpetual bond similar to a non-growth common stock
Prior to completing this assignment, review Assignment of your course text. Prepare an evaluation of the performance of the Radiology Department Manager for a hospital.
blanchford enterprises is considering a project that has the following cash flow data. what is the projects payback?
What is the balance of your margin account at the end of the day? Suppose your margin account has $2000. What is the futures price per unit above which there will be a margin call? Suppose your margin account has $2000. What is the futures price per..
Belvedere Inc. has an annual payroll of $52 million. The firm pays employees every two weeks on Friday afternoon. Last month, the books were closed on the Tuesday after payday. How much is the payroll accrual at the end of the month?
a. identify the main concerns in analysis of accounts receivable.b. describe information other than that usually
You are considering the purchase of a set of consul bonds paying a total of $20,000 per year. If your required rate of return to make the purchase is 7%, how much will you be willing to pay?
What roles did Black slaves play in the Civil War? What roles did free Blacks play in the Civil War? How did the war affect each group?
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