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Call and put options for aunt Jemima's EnCana stock

Your Aunt Jemima has a $100,000 investment portfolio comprising some bonds and 200 EnCana shares. At the time the portfolio was formed (two months ago), the shares were worth $12,782 and the bonds were worth $87,218. Today, EnCana shares are worth $44.20 per share, while the bond yields have decreased so that the bonds are now w

Debt ratings, types of leases, components of capital, credit analysis

1. Explain why selecting a target senior debt rating is a reasonable approach to choosing a capital structure. Explain why a target senior debt rating of single- A is a prudent objective when there is only a very limited new issue market for non-investment-grade debt, and when investor willingness to purchase triple-B-rated deb

A stock option plan and the impact an effective compensation program has on a company. The induced conversions of convertible bonds. The proportional method to record stock warrants issued with other securities Preferred stock and how it differs from common stock The difference in par value and no par value stock The proportional method.

Please help me explain the following in laymen's terms - and I need to be brief. A stock option plan and the impact an effective compensation program has on a company. The induced conversions of convertible bonds. The proportional method to record stock warrants issued with other securities Preferred stock and how it

Similarities and differences between convertible debt

Discuss similarities and the differences between convertible debt and debt issued with stock warrants. In the absence of restrictive provisions, what are the basic rights of stockholders of a corporation. Why is a preemptive right important

EPS, tax rate and Dividends - Reel Envy Corporation and Gold Reel Corporation

Reel Envy Corporation The Controller of Reel Envy (registered trademark) Corporation has given you the responsibility of calculating the earnings per share figures for the year ended 12-31-08. The information provided to you discloses the following: 1. Common stock at 1-1-08, stated value $2, authorized 5,000,000 shares;

Improving PC Services of Oshkosh Truck Corp.

Read the case carefully and answer the included questions in detail. 1. What are some of factors that contributed to Oshkosh Truck Corp's need to improve its PC services? 2. Which end users did the improvements help most? 3. What are some of the challenges that were encountered in the implementation of the improvements?

Statement of Cash Flows with related footnote disclosures.

CARIBOU The following information was taken from the accounting records of the Caribou Company: Account Balances January 1, 2010 December 31, 2010 Debits Cash $ 1,400 $ 2,400 Accounts receivable (net) 2,800 2,690 Marketable securities (at cost) 1,700 3,000 Allowance for change in value 500 800 Inventories 8,100 7

Use of futures and options hedging strategies for an oil producer

Risk management Question: You are the risk manager of an energy producing company. Your firm explores for and extracts crude oil. Your firm regularly produces approximately 50,000 barrels of oil monthly. You watch the energy markets closely and determine in early May 2011 that the current market price of $110 per barrel mayb

Stock option controversy

How does the controversy over stock option accounting affect the duties of a C.P.A? What are your thoughts on this controversy?

Bonds straight value

The following data apply to Saunders Corporation's convertible bonds. Maturity 10 Stock price $30.00 Par value $1,000 Conversion price $50.00 Annual coupon 7.00% Straight-debt yield 8.00% What is the bond's straight-debt value at the time of issue?

Finance: risk neutral probabilities, and value of equity

Review Questions. 10-2 and 10-3 (attached) ---------------- Given Available gas (MCF) 50,000,000 Price of Gas (today) $14.03 per MCF Gas Price Next Year High $18.16 Low $12.17 Forward price for next year $14.87 Development cost per MCF $4.00 Debt (on the property) $450,000,000 In

Business Taxation (USA Only)

(1). FACTS: Assume that you are the controller for MetroCorp LTD. The board of Directors is considering the adoption of a stock option plan. They have asked you to prepare an explanation of a qualified stock option plan and a nonqualified stock option option does not have an ascertainable fair market value). Assume that the curr

Put-call parity - The Keller Fund's Option Investment Strategies

Harvard Business Case: 9-295-096 January 19, 1995 The Keller Fund's Option Investment Strategies 1. If you owned Lotus's stock, but were concerned about the possibility of bad news, how might you use options to protect yourself against the risk of a price decline? 2. Suppose on January 18, 1994, the daily yield to matur

Put-Call Parity, Options and Arbitrage

Question 1 What is put-call parity and why does it hold? Please show your proof? Question 2 The following prices are observed. How are you going to profit from the opportunity? Stock A is selling for $95.00 Call options on stock A with exercise price of 90 and with April expiration are selling for $9 per share Put opt

Which company is better and why?

Assume that you have decided to invest a portion of your money in the stock market. You ask your broker to recommend a couple of preferred stocks for you to consider as an investment. Your broker recommends the following two companies. Both are start-up corporations, but you agree with your broker that both have excellent potent

Historical trends for small capitalization stocks this year

If this year is consistent with historical trends you would expect the return for small capitalization stocks to be: a. Below common stocks and above long-term government bonds. b. Below common stocks and below long-term government bonds. c. Above last year's return on the same stocks. d. Above common stock, long-term go

Short Position, Calls, Puts, & Portfolio Insurance

1. If you have a short position on a call option with a strike price of $53.50 and the stock price is $55.50 at the expiration date and the holder of the option exercise the option, what will be the result to you? a. You can cancel the transaction because the strike price is less than the stock price. b. You can buy the stoc

Multinational Corporate Finance

1. Assume that a bank's bid rate on Swiss francs is $.45 and its ask rate is $.47. Its bid ask percentage spread is: a) 4.44%. b) 4.26%. c) 4.03%. d) 4.17%. 2. Assume the Canadian dollar is equal to $.88 and the Peruvian Sol is equal to $.35. The value of the Peruvian Sol in Canadian dollars is: a)

Long/ Short position in a put/ short option with an exercise price

Suppose that Janice, a Hong Kong investor, holds one euro, currently valued at 15 (the exchange rate of the Hong Kong dollar against the euro in direct quote). She is concerned that over the next few months the value of her holding might decline and she would like to hedge that risk by supplementing her holding with one of the f

Put Option Stock Strike Prices

1. Currently, a stock price is $47. Over each of the next 2 6-month periods it is expected to go up by 15% or down by 15%. The risk-free rate is 6% per annum with continuous compounding. What is the value of a 1-year European call option with a strike price of $50? 2. Suppose that put options on a stock with strike prices $3

Strategic Management

How does Disney's corporate-level strategy add value beyond what the business units could do by themselves? 533 words, two references

Paulo writes a put option on Japanese yen with a strike price of $0.008000/¥ (¥125.00/$) at a premium of 0.0080 cents per yen and with an expiration date six month from now. The option is for ¥12,500,000. What is Paulo's profit or loss at maturity if the ending spot rates are ¥110/$, ¥115/$, ¥120/$, ¥125/$, ¥130/$, ¥135/$, and ¥140/$?

Paulo writes a put option on Japanese yen with a strike price of $0.008000/¥ (¥125.00/$) at a premium of 0.0080 cents per yen and with an expiration date six month from now. The option is for ¥12,500,000. What is Paulo's profit or loss at maturity if the ending spot rates are ¥110/$, ¥115/$, ¥120/$, ¥125/$, ¥130/$, ¥13

Mize Co (Morton): Calculate diluted earnings per share.

On January 2, 2011, Mize Co. (Morton) issued at par $300,000 of 9% convertible bonds. Each $1,000 bond is convertible into 30 shares. No bonds were converted during 2007. Mize had 50,000 shares of common stock outstanding during 2011. Mize 's 2011 net income was $160,000 and the income tax rate was 30%. What would Mize's diluted