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The Chicago Mercantile Exchange offers a futures contract on the S&P 500: The size of a CME S&P 500® futures contract is the contract's multiplier ($250) times the current CME S&P 500 futures level. If the Index level is at 1400, for example, then the contract is worth: $250 × 1400 = $350,000. The contract is settled by a cash payment between the buyer and the seller.
a. What type of investor would find this futures contract useful in hedging? Briefly explain how these investors would use it to hedge.
b. What type of investor would find this futures contract useful in speculating? Briefly explain how these investors would use it to speculate.
Calculate the ex-rights price that would make a new stockholder indifferent between buying shares at the old stock price and exercising the rights or buying the shares ex-rights.
What is the value of a one-year European put option with a strike price of 33? Use the one-step binomial tree.
what is the major difference in the obligation of one with a long position in a futures or forward contract in
The risk-free rate of return is 4.5 percent and the expected return on the market is 12 percent. What is the beta of the portfolio?
Make a PPT. You are required to choose two multinational companies based in two different countries and access their most recent annual reports. Choose companies that place copies of their annual reports on their website. The annual reports are norma..
common stock valuation-zero growth scotto manufacturing is a mature firm in the machine tool component industry. the
Please calculate 1-year forward exchange rate, based on the Interest Rate Parity.If the actual 1-year forward rate is quoted at $1.34/€, is there any covered interest arbitrage opportunity? Please explain.
A company has announced growth rate of its dividend going forward will be 2% annually forever. The dividend in year 4 will be $3.00. The discount rate on the stock is 10%. What will stock price be in year 18?
Suppose the offering is brought to market priced at $45. You have access to the offering and sense an arbitrage. Describe exactly the positions you would take to execute the arbitrage, assuming you can trade in calls, puts, forwards, and the unde..
How large of a sales increase can the company achieve without having to raise funds externally? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest cent.
Compute Z score and use either the Area Under Normal Distribution Calculator or Z - table link to compute the corresponding probability.
Alternative A: Forgo the discount on its trade credit agreement, wait and pay the full $10,500 in one month. Alternative B: Borrow the money from Bank A, which has offered to lend the firm $10,332 for one month at an APR (compounded monthly) of 11..
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