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1 Explain the difference between a forward start option and a package.
Outperformance certificates are offered to investors by many European banks as a way of investing in a company's stock. The initial investment equals to the stock price, S0. If the stock price goes up between time 0 and T, the investor gains k times the increase at time T, where k is, the stock price used to calculate the gain at time T is capped at some maximum level M. If the stock price goes down, the investor's loss is equal to the decrease. The investor does not receive dividends.
a) Show that an outperformance certificate is a package.
b) Calculate the value of a one-year outperformance certificate when the stock price is 50 pounds, k=1.5, M=68 pounds, the risk-free rate is 4.5%, and the stock price volatility is 23%. Dividends equal to 0,5 pounds are expected in 2 months, 5 months, 8 months, and 11 months.
Q. Compute the economic order quantity? TNG has a current order size of 50000 units Average number of orders per year = demand/order size = 255380/50000 = 5·11 orders Ann
Explain about the equity claims in the financial security. Equity classifies claims to shares into the net income and assets of a firm, and they do not contain a maturity date.
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Does the shareholders' equity represent the savings a company has accumulated through the years? No. The number which shows in the Shareholder's Equity of a company that was fo
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Define the market segmentation of the term structure of interest rates. Market segmentation: And also the investors’ expectations regarding future interest rates and thei
Q. Describes the Gordons dividend model? Gordon's Model: - Gordon's model is one more theory which contends that dividend policy is relevant for the value of the firm. Alternat
Q. What is Adjusted Basis? Adjusted Basis - After a taxpayer's basis in property is determined, it should be adjusted upwardto include any additions of capital to the property
WHAT IF BALANCE DOES NOT EXIT
What to do to maximise profits of the company If you want to maximise profits, there are only two methods to do it. Either you decrease your expenses (also known as costs) or y
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