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You represent the Texas State Pension Fund. On your direction, the fund invested $100 Million dollars into Cowher Capital Management, a large hedge fund. You negotiated a "High Water Mark" provision, and a 1%/20% fee schedule. There is a lock-up provision so you are not allowed to withdraw any funds until at least three years have passed. If the fund has the following annual returns of 10%, -25%, -20%, and 45% (also assume like we said in class, the management fee is paid at the beginning of the year, but performance fee at year end) you do not add or remove any money from the fund answer the following:
a. In what years, do you pay the performance fee?
b. What is the total fee percentage paid in the final year?
c. What your ending balance?
Explain why this is the correct value of the forward contract in six months even though the contract does not have a liquid market like a futures contract.
Desert Rose, Inc., a prominent consumer products firm, is debating whether to convert its all-equity capital structure to one that is 30 percent debt. Currently, there are 20,000 shares outstanding, and the price per share is $57. What is her cash fl..
Consider a project with an initial outlay of $1,000 and yearly cash flows as follows: -200, -100, 300, 300, 300, 100, 100, 200, 700, 400, and 100. Calculate the classical payback period assuming 10% cost of funds.
Niko has purchased a brand new machine to produce its High Flight line of shoes. What is the financial break-even point?
Antiques ‘R’ Us is a mature manufacturing firm.
The dividends are anticipated to maintain a growth rate of 5.75 percent, forever.
Glen’s Tobacco Shop has total assets of $99.6 million. Fifty percent of these assets are financed with debt of which $30.8 million is current liabilities. The firm has no preferred stock but the balance in common stock and paid-in surplus is $28.4 mi..
What is the Net Present Value(NPV) of the project?
Ashes Divide Corporation has bonds on the market with 17 years to maturity, a YTM of 10.0 percent, and a current price of $1,216.50. The bonds make semiannual payments. What must the coupon rate be on these bonds?
Your company will generate $48,500 in cash flow each year for the next twelve years from a new information database. The computer system needed to set up the database costs $274,000. Calculate the present value of the generated cash flows.
What would the six-month forward rate have to be on the Norwegian krone to prevent arbitrage?
LaPorta, Lakonishok, Shleifer, and Vishny (“Good News for Value Stocks,” Journal of Finance, June 1997) study the returns on stocks on the few days surrounding their quarterly earnings announcements (relative to various expected return benchmarks).
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