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# Derivatives

### Deeble Construction Co: Value of Options

Question: Deeble Construction Co.'s stock is trading at \$30 a share. There are also call options on the company's stock, some with an exercise price of \$25 and some with an exercise price of \$35. All options expire in three months. Which of the following best describes the value of these options? - The options with the \$

### Central Medical Supply: refit obsolete testing equipment or sell it. Analyze options

Please provide your reasoning. Thank you. Central Medical Supply, Inc., a manufacturer of medical testing equipment, has \$240,000 worth of an obsolete line of testing equipment. The obsolete equipment can be adapted to fit another line of testing equipment at a cost of \$64,000; the market value would then be \$136,000. Howe

### Derivatives: Profit (Loss) on Put Options

An investor owns 1000 shares of SoftKiss Lipstick Company. The stock currently sells for \$65 per share. The investor is very concerned that the price may be too high so she buys 7 put option contracts to offset some of the risk of the stock price falling. The contracts have a 6-month option period with an exercise price of \$65.

### Socio-economic issues of India

What are the socio-economic issues of India from a MNC manufacturing company view? Need analysis describe the appropriate techniques and procedures for mitigating the risks identified for India. Use the Delphi techniques, sensitivity analysis, checklist approach, or standard deviation of cash flows. From the analysis use quali

### Risk Analysis and Options

If the current situation exist with: Best Case NPV \$600 with a Probability of .5, Worst Case NPV -\$1,000 with a Probability of .2, and a Likely Case of NPV \$300 with a Probability of .3 an abandonment option that could change the Worst case NPV to -\$300 what is the value of the option at least: Would it be \$470, \$330, \$190 or

### Embedded Options Notion

On the notion of embedded options, which of the following is/are true? A. If virtually all projects have embedded options, ignoring options is likely to lead to serious undervalution. B. There are two possible outcomes for virtually every business idea. C. Virtually every business has both the option to abandon and the o

### Short-term Financing Options

What are the costs and benefits of each short-term financing option? Which ones are typically more favorable?

### Alternative Dispute Resolution

Alternative Dispute Resolution (ADR) is an important aspect of the court's structure in that it allows disputes to be resolved without the need for litigation. If the case is not resolved by ADR or administratively, what options did you have to proceed to litigation? What courts would address this issue? To examine your understa

### Which of the two options is more profitable to Grand Canyon?

Suppose a tour guide approached the general manager of the Grand Canyon Railway with a proposal to offer a special guided tour to the agent's clients. The tour would occur 20 times each summer and be part of a larger itinerary that the agent is putting together. The agent presented two options: (a) a special 65-mile tour wit

### Various Pay Plan Options

Scenario: You are the Director of Compensation and Benefits for Lansing-Smith Corporation, a 6-month old sales and service organization that currently has a workforce of 150 employees. You recently joined the organization when the Vice President of Operations decided to move the Compensation and Benefits function out of the Acc

### PiggyBank

The product development team from PiggyBank was convinced by your presentation and has hired you to help them with their credit card decision. They have focused on three options for their credit card incentives: A. cash back when the consumer makes an online purchase; B. cash back when the consumer makes a purchase at a c

For which of these items does the company need licenses? Why? 1. Product marketing text written by marketing Department employees. 2. A photo from the company's "print" marketing brochures. 3. A new company logo, to be created by a freelance graphic designer (to be used on coffee mugs offered free to site visitors, as well

### Milinder Recycling Company: High Employee Turnover

The Milinder Recycling Company has experienced significant growth over the past two years. Due to this growth, the company is currently encountering problems in the following areas: Especially among new hires, there is an extremely high turnover rate. Discuss two different options for addressing the problem.

### Evaluate alternative investment options

Nowhere Bus Lines (NBL) is considering two alternative buses to transport people from the commuter lot to the main campus. Bus S has a cost of \$50,000 and will produce end-of-year net cash flows of \$25,000 per year for 3 years. Bus L will cost \$75,000 and will produce cash flows of \$23,000 per year for the next 6 years. The c

### Purchase of house: evaluate two financing options

You are contemplating the purchase of a house. You are offered two financing choices: A. Borrow \$500,000 on a 30-year term at 9% p.a. with equal monthly payments in arrears, or B. Borrow the same amount interest-only for 10-years at 8.5% with an up-front fee of \$10,000, the full amount of the principal to be repaid at the

### Minimum and maximum of a function that is not constrained

To find the minimum or maximum of a function that is not constrained, that is, there are no restrictions on range of the function, you take the derivative of the function, set it equal to zero, and solve for the variable. The intuition is that the derivative is the instantaneous slope of the function. A minimum or maximum occu