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1. What is the value of a long position in a one-year futures or forward contract on a non-income paying financial asset with a current price of $100, where Rf is 5% and the contract price is $90? All else equal, what would a call option price traded above or below its theoretical value using a Black Sholes model imply about the market view of volatility in the future? 2. How does the implied volatility / strike price association or volatility smile for equity options differ from that of currency options? Explain in words and draw a graph showing the relationship between strike price and implied volatility for equity options and currency options, making sure difference is noticeable and the axis are labeled. 3. What are two explanations for the shape of the currency volatility smile? 4. What is one explanation for the shape of the stock options option volatility smile?
In the context of Time Value of Money, what is the most dynamic or important variable used in valuation? Explain
explain contingent exposure and discuss the advantages of using currency options to manage this type of currency
1. find the discounted value of an ordinary annuity of 1490 a month for 3 years if the interest is 14 14 compounded
Examine the feasibility of a new manufacturing plant
Calculating multiple cash flows for a year and the amount of the annuity shown below is the amount of each individual cash flow
define internal growth rate igr. identify the characteristics of a high-growth firm that has no external funds
What changes in the management of Genatron's current assets seem to have occurred between the two years?
The Mitre Box Company is considering a project with an initial cost of $35,000 and future cash inflows of $20,000, $15,000, $10,000 and $5,000 over the next four years respectively.
A 1 year European Call option with a strike of $100 * e^.05*1 = $105.127 has a premium of $11.924. A 1.5 year European call option with a strike price of $100 * e^(.05*1.5) = $107.788 has a premium of $11.50.
An 8-year corporate bond has a yield of 8.3%, which includes a liquidity premium of 0.75%. What is its default risk premium?
valuation of a firmrsquos financial assets is said to be based on what is expected in the future in terms of the future
The 2008 balance sheet of Maria's Tennis Shop, Inc., showed long-term debt of $3 million, and the 2009 balance sheet showed long-term debt of $4 million. The 2009 income statement showed an interest expense of $330,000. What was the firm's cash fl..
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