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An index is 1,200. The three-month risk-free rate is 3% per annum and the dividend yield over the next three months is 1.2% per annum.
The six-month risk-free rate is 3.5% per annum and the dividend yield over the next six months is 1% per annum.
Estimate the futures price of the index for three-month and six-month contracts. All interest rates and dividend yields are continuously compounded.
Use the following data: Purchase Costs Leasing Costs Down payment: $3,600 Security deposit: $1,200 Loan payment: $1,080 for 48 months Lease payment: $1,080 for 48 months Estimated value at end of loan: $4,700 End-of-lease charges: $705 Opportunity co..
Jansken Co. has an ROE = .12 and a beta of 1.10. It plans to maintain indefinitely its traditional retention ratio of .65. This year's earnings were $2.50 per share. This year's dividend was jsut paid. The consensus estimate of the coming year's mark..
An investment company. Will speculate on the pound with a forward contract. The investment company expects the pound to depreciate from today’s spot rate of $1.95 to a spot rate of $1.85 in 90 days. The 90 day forward rate is $1.65. To make a profit,..
Calculating Portfolio Betas You own a stock portfolio invested 10 percent in Stock Q , 35 percent in Stock R , 20 percent in Stock S , and 35 percent in Stock T. The betas for these four stocks are .75, 1.90, 1.38, and 1.16, respectively. What is the..
Quitmeyer Electronics Incorporated manufactures the following six microcomputer peripheral devices: internal modems, external modems, graphics circuit boards, CD drives, hard disk drives, and memory expansion boards. Device Revenue per unit sold ($) ..
Xyz has been sue for patent infringement. the common stock which currently sells for 0.50/share will rise to $3, or will become worthless, depending on the outcome os the trial. if you believe that there is a 50-50 chance of bankruptcy, what is the e..
Newnovetel cellular is issuing bonds pay no interest but can be converted into $9K at maturity in 17 years. To price them competitively, it was determined they should yield eight percent compounded annually. At what price should Newnovatel sell these..
A project analyst estimates that a proposed project will have an expected return of 16%, which is higher than the Minimum Acceptable Rate of Return demanded by the corporation. Under what conditions this decision might be warranted? Under what condit..
Kaelea, Inc., has no debt outstanding and a total market value of $74,000. Earnings before interest and taxes, EBIT, are projected to be $8,100 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 21 perce..
Filer manufacturing has 8 million shares of common stock outstanding. The current share price is $87, and the book value per share is $6. Filer manufacturing also has two bond issues outstanding. The first bond issue has a face value of $75 million a..
David Ortiz Motors has a target capital structure of 45% debt and 55% equity. The yield to maturity on the company's outstanding bonds is 9%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 10.08%. What is the comp..
Suppose a stock had an initial price of $60 per share, paid a dividend of $2.20 per share during the year, and had an ending share price of $70. Compute the percentage total return
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