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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

Questions about organizational philosophies and technology

How do companies use technology to help set and manage ethical standards and guidelines? How can this shape the type of work environment or culture a company promotes? How does using technology to perform human resources functions affect company culture? response is 577 words

Strategic Management

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

The market price of Delta

Lew paid $300 to purchase a call on Delta stock with a strike price of $25. What does the market price of Delta have to be for Lew to break-even on his option investment? Ignore transaction costs and taxes.

Intrinsic value and time value of an option

Gillette is trading at $31.11. Call options with a strike price of $35 are priced at $.30. What is the intrinsic value of the option and what is the time value? Can you show how you solved this?

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

Picking Stocks to Invest

I need to choose 2 stocks from the following: Coca Cola Exxon/Mobil General Electric Pepsi Cola (Pepsico Inc) Proctor and Gamble General Motor Explain the choice of companies What did you see that made them seem more attractive to your hard-earned money? What made them better than the others? What does the stock mark

Record stock dividends, splits, diluted EPS (convertible preferred or bonds)

How do you record stock dividends? What about stock splits - how do you record them? Suppose we have dilutive securities, how do we handle them when computing diluted earnings per share? Suppose we have convertible preferred stock? How would we compute diluted earnings per share? Suppose we have convertible bonds? How w

Speculative or Another Investment Should Be Selected

Please help with the following: A leader in your firm has been studying the foreign exchange market for a number of years and believes that she can predict several of the foreign currency exchange rates relative to the U.S. dollar. The firm has $500,000 to invest in the spot, forward, or options markets. Assume the spot rate

Fondren Exploration: Compute diluted EPS; Worldwide Scientific merger; GM merger

Please respond in a word document format. 1. Fondren Exploration, Ltd., has 1,000 convertible bonds ($1,000 par value) outstanding, each of which may be converted to 50 shares. The $1 million worth of bonds has 25 years to maturity. The current price of the stock is $26 per share. The firm's net income in the most recent fis

Durkin's ability to pick stocks consistent with market efficiency

The Durkin Investing Agency has been the best stock picker in the country for the past two years, Before this rise to fame occurred, the Durkin newsletter has 200 subscribers. Those subscribers beat the market consistently, earning substantially higher returns after adjustment for risk and transaction costs. Subscriptions hav

Variables Affecting Option Price

Applying the following matrix, state whether the variable would increase or decrease the value of the call or put, keeping all other variables constant. Arrows imply increasing or decreasing the value of the variable. DISCUSS YOUR REASONING FOR EACH VARIABLE. Variable Call Value Put Value Stock price (↑)

Evaluate Swiss Bank Loan vs domestic loan for Poly Pipe acquisition project

See attached case file. Evaluate the Swiss bank loan. Evaluate it against what? Well, let's evaluate it against the new domestic bank loan (extension). Now, the key is to determine the effective rate of the Swiss loan versus the domestic bank loan and the terms of each loan with respect to the term of the investment (Poly Pip

Combination of European exchange rate options

You are based in the UK and have a contract with your bank to sell ? at the exchange rate £0.8/? if the exchange rate is less or equal to £0.8/? in one month's time and to sell the ? at £0.9/? if the exchange rate is greater or equal to £0.9/? at that time. Should the exchange rate lie between £0.8/? and £0.9/?, you will

Conversion ratio for bonds; Ex-dividend date

1. What is the conversion ratio for each of the following bonds? a.) A $1,000 par-value bond that is convertible into common stock at $43.75 per share. b.) A $1,000 par value bond that is convertible into common stock at $25.00 per share. 2. Morris wishes to purchase shares of Deb, Inc. The company's board of direct

Logic of Hedging: Sam Crawford at Morrison Oil Company

Please use Excel attachment to solve problem. Morrison Oil Company's chief financial analyst is Samuel Crawford. Sam completed his analysis suggesting that the investment was indeed a good one for the company and presented it to the firm's executive committee. The executive committee consists of the firm's CEO, CFO, and COO.

SmartMoney: Investments That Crank Out Cash - WSJ.com

Review the following article from the Wall Street journal: SmartMoney: Investments That Crank Out Cash - WSJ.com http://online.wsj.com/article/SB10001424052748703615104575329132724496468.html?KEYWORDS=investing+overseas Requirements: 2 references Structure of the paper: Abstract Article Review Opinion/Analysis R

Dealing with Foreign Exchange Rates: Blades Inc. Case

Blades, Inc., needs to order supplies two months ahead of the delivery date. It is considering an order from a Japanese supplier that requires a payment of 12.5 million yen payable as of the delivery date. Blades has two choices: 1. Purchase two call option contracts (since each option contract represents 6,250,000 yen). 2.

Dee Trader Brokerage Accounts

1. Dee Trader opens a brokerage account, and purchases 300 shares of Internet Dreams at $40 per share. She borrow $4,000 from the broker to help pay for the purchase. The interest rate on the loan is 8%. a. What is the margin in Deeâ??s account when she first purchases the stock? b. If the share price falls to $30 per share b

Using Foreign Exchange and Derivative Markets to Minimize Risk

You are the Finance Manager of CompuTech, Inc, a US based company. CompuTech imports computer parts from Japan, assembles computers in the US and exports them to companies in Mexico. The parts are paid in Japanese Yen and the companies in Mexico pays in Mexican Pesos (meaning that you have payables in Yen and receivables in Peso

Pricing Options on Binomial Tree

I'm trying to answer the questions about the two period binomial tree pasted here. Thanks for your help!! Pricing options on binomial tree: Consider a two-period binomial example where the underlying asset's price movements are modeled over the next two months, each period corresponding to one month. The current level of the

Tax & Earnings per Share for Northern and Poland Corporation

A. Northern Corporation purchased a fixed asset for $20 million. At 12-31-08, the carrying value of the asset was $17 million and its tax basis was $12 million. On 12-31-09, the carrying value was $16 million and the tax basis was $9 million. Northern also reported $2 million in unearned income, $3 in prepaid expenses, and $1 m

Walker Company Convertible securities: Compute diluted earnings per share

A template has been attached. Walker Company has 15,00 shares of common stock outstanding during all of 2010. It also has two converible securties outstanding at the end of 2010. These are: 1. convertible perferred stock :1,000 shares of 9%, $100 par, preferred stock were issued in 2009 for $140 per share. Each shar