You wish to hedge 90 percent of the current portfolio value with futures. The value of the portfolio is $50 million and tracks the S&P 500 index. The index is 1,076.32 ($250 per point) and the portfolio has a beta of 1.2. Calculate the appropriate hedge using futures contracts.
A company is evaluating two systems. The company's revenue stream will not be affected by the choice of the systems, the projects are being evaluated by finding the PV of each set of costs. The company's required rate of return is 13% and it adds or subtracts 3 percentage points to adjust for project risk differences. System
What is the expected return on a portfolio if an equal amount is invested in each stock? What would be expected return if 50 percent of your funds is invested in stock A and the remaining funds are split evenly between stocks B and C? Stock A 7% Stock B 12 Stock C 20 You are considering two stocks and have determined
These are two accounting problems that I need solved. They deal with traditional cost and ABC cost systems, cost driver rates and cost pools, etc.. (See attached file for full problem description).
Agree or Disagree. Why? Axiom 9: All risk is not equal since some risk can be diversified away and some cannot. The process of diversification can reduce risk, and as a result, measuring a project or an asset's risk is very difficult.
How to find the present and future values of this problem in detail -------------------------------------------------------------------------------- Compute the present value of a $100 cash flow for the following combinations of discount rates and times: a. r = 8 percent, t = 10 years b. r = 8 percent, t = 20 years c.
Prepare and submit an estimated balance sheet and income statement as of June 30, 2000, for Crown Electrical Supply based on the information from the discussion material of lesson 5 of this course manual. Keep the bank loan at $75,000 (remember this is a "what if" analysis) and use cash as the plug figure. After the liabilities/
The Smiths are buying a home that sells for $175,000. The lending institution is requiring a minimum down payment of 20%. To obtain a 20 yr mortgage at 8%, they must pay two (2) points at the time of closing. A) What is the required down payment? B) With 20% down payment, what is the amount of the mortage on the prope
Part 1: Obtain the most recent financial statements for Microsoft from the U.S. Securities and Exchange Commission website (http://www.sec.gov/). (Look for the annual report or Form 10-K.) Part 2: discuss and decide upon the best ratios for creating a forecast model for sales through operating income. Part 3: Develop
(See attached file for full problem description) --- 3. As you checked "Your Professor's answer" to the Self-Check Excercise problem 6 from this lesson (lesson 16) you will note that each year's net cash flows are calculated by adding depreciation back to net earnings. On the other hand, problem 1 in this assignment specifie
"Who can figure bankers?" Pehr Weisengraf mumbled as he returned to the office of his small candy manufacturing business, Professional Confectioners. "They're willing to lend money only to those business owners who don't really need it. If you can prove you don't need it, they'll throw it at your feet. Unfortunately, we need it,
Nowlin Pipe & Steel has projected sales of 72,000 pipes this year, an ordering cost of $6 per order, and carrying costs of $2.40 per pipe. a. What is the economic ordering quantity? b. How many orders will be placed during the year? c. What will the average inventory be?
Please advise if my calculation are correct from the excel file. The word file are the questions that were asked. --- Event Study and Market Efficiency Use the market model estimates of residual returns on IBM to determine whether the stock market reacts in an efficient way to earnings announcements. The data that is pr
Which business form gives you the lease liability exposure and why? This question is in reference to the three types of business structures: sole proprietorship, partnership, and corporation.
On 10/1/05, the ACCT300 Commissioner authorized a special loan agreement with Astros Co, whereby Astros Co would borrow $125,000 at 9% interest. Conditions of tthe agreement require the repayment of the loan with 7 annual payments, beginning 10/1/06, in the following amounts Payment Number Payment Amount 1
1. Calculating Liquidity Ratios. SDJ, Inca, has net working capital of $900, current liabilities of $4,320, and inventory of $ 1 ,900. What is the current ratio? What is the quick ratio? 2. Calculating Profitability Ratios. Bennett's Bird Cages has sales of $41 million, total assets of $32 million, and total debt of $11 milli
Working on two questions regarding auctions and Retirememnt planning, they are attached here, just need some direction on the manner in which I need to proceed and some background on auctions and types. --- 1. An oil painting by the late Carl Barks comes up for auction. Though not a household name, his work is highly admir
What are the economic functions financial intermediaries perform? What is the role of broker in the financial market? How has that role changed since the inception of on-line investing?
If I plan to go to Germany 30 days and the spot exchange rate is $1.30=1 euro. The 30-day forward rate is $1.36=1 euro. Disregarding fees, would it be better to exchange dollars for euro now or wait until I get to Europe in 30 days? Why?
Instructions: Present the journal entries specified below; show supporting calculations. The trial balance of Garnett Company at December 31, 2002 includes the following: Debits Credits
Stock A has a standard deviation of return of 50%. Stock B has a standard deviation of return of 40%. The two stocks have a correlation of 60%. What is the standard deviation of return of a portfolio that is 25% Stock A and 75% Stock B? PLEASE REFER TO THE ATTACHED MS_WORD FILE, for details. thank you.
Please see the attachment for full problem. A company exports goods to France and Sweden. These markets exhibit different demand schedules and price elasticities. The exporter decides to segment the markets and engage in price discrimination. Using the information in the table below, determine the equilibrium prices and quant
Bill Goodman has been offered the opportunity to invest $15,000 in a start-up company that intends to supply personal digital assistants (PDAs) to physicians in order to enable them to determine the approved medication for each HMO patient they treat. The business plan for this start-up calls for raising a total of between $1
A company has a debt ratio of 0.5, total assets turnover of 0.25, and profit margin of 10%. The company wants to double ROE by increasing profit margin to 12%, leaving asset turnover the same, and increasing debt utilization. What new debt ratio, along with the new 12% profit margin, would be required to double the Rate of Ret
Determining the Cost of Capital (WACC) Case 19 Can One Size Fit All? The Oceanic Corporation, a Chesapeake, VA based company, was established in 1994. Glenn Rodgers III founded the corporation, which was privately owned at the time, after his retirement from Norentech Corporation.The Oceanic Corporation was original
10. NPV and IRR. A project that costs $3,000 to install will provide annual cash flows of $800 for each of the next 6 years. Is this project worth pursuing if the discount rate is 10 percent? How high can the discount rate be before you would reject the project? 11. Project Evaluation. Revenues generated by a new fad pro
Present Values. Compute the present value of a $100 cash flow for the following combinations of discount rates and times: r = 8 percent. t = 10 years. r = 8 percent. t = 20 years. r = 4 percent. t = 10 years. r = 4 percent. t = 20 years. Future Values. Compute the future value of a $100 cash flow for the same combinatio
A) Which is preferable, a loan with a lower present value or a loan with a lower periodic installment? Why? b) Why is more interest paid at the beginning of a loan period than at the end?
1. Which of the following receivables would not be classified as an "other receivable"? a. Advance to an employee b. Refundable income tax c. Notes receivable d. Interest receivable 2. An aging of a company's accounts receivable indicates that $6,000 are estimated to be uncollectible. I
Chase County Bank agrees to lend Agler Brick Company $300,000 on January 1. Agler Brick Company signs a $300,000, 8%, 9-month note. 8. The entry made by Agler Brick Company on January 1 to record the proceeds and issuance of the note is a. Interest Expense ...................... 18,000 C