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1.What is a forward contract? How is a forward contract used to manage risk? Under what circumstances is this appropriately used?
1A.Forward contracts lock in the exchange rate of a product or service. The supplier will markup the value of the contract for what they believe the exchange rate may be in the future and the contractor wants to set a value that is acceptable to their expected costs. In this the contractor can reduce uncertainty. The risk that remains is the actual cost of the exchange rate at the time of exchange compared to the value of the contract.Does one side have more risk than the other? If so why? If not, why not? Do both sides get what they want; is this a win-win scenario?2. What is a derivative? How are derivatives used in risk management? What are some challenges used in mitigating risk with derivatives?3.What is an audit committee? What is the function of an audit committee? How does an audit committee in your organization insure compliance with Securities and Exchange Commission regulations?4.Write and present a summary of how this week’s readings and activities (Forward Contracts, Derivative, Audit Committee) have affected your thought process regarding the week’s course objectives. Be sure to include the DQ’s, team discussions and assignments, your individual assignments, the text reading materials, and the electronic reserve articles in the discussion. The summary should be very detail and created in a positive manner.
B1.What are strategic objectives? What is the purpose of strategic objectives? What makes an effective strategic objective? What are examples of strategic objectives for you organization or one with which you are familiar?
B2.What is the difference among strategic, long-term, and short-term objectives? What is the relationship between objectives and goals? What are examples of this relationship?
Fama's Llamas has a WACC of 10.2%. The company's costs of equity is 14%, and its pertax cost of debt is 8.4 percent.
Discuss and explain the effect of required reserves and capital levels on a bank's profitability.
What are the risks which are associated with debt, and why may those risks be unacceptable to the corporation that needs money?
Jones Co. currently is 100 percent equity financed. The company is considering changing its capital structure. More specifically, Jones' CFO is considering a recapitalization plan in which the firm would issue long-term debt with a yield of 9 percent..
Explain the tools the Fed uses to control interest rates and the money supply, and compare the positive and negative effects of their application.
Find out the total discount or premium for each issue. Find out the annual amount of discount or premium amortized for each bond.
The ABC Co. has $1,000 face value stock outstanding with a market price of $1,112.9. The stock pays interest annually, matures in 14 years, and has a yield to maturity of 6 percent. What is the annual coupon amount?
The firms Class Ann bonds have the same risk,maturity, nominal interest rate, and par value, but these bonds pay interest annually. Neither bond is callable. At what price should the annual payment bond sell?
Other information: risk free rate = 4.0%, the market risk premium = 6.5%, tax rate = 40.0%. Using the average of the CAPM and DCF estimates, find the required return on equity.
Ninja Co. issued 13-year bonds a year ago at a coupon rate of 7.9 percent. The bonds make semiannual payments. If the YTM on these bonds is 6.2 percent, what is the current bond price?
The Lo Company earned $ 2.60 per share and paid a dividend of $ 1.30 per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 5 percent per year in the future. Determine the value of the stock.
Use the AFN equation to forecast the additional funds Carter will need for the coming year.
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