1. ? What is (Microsoft) reported retained earnings? How much is 10 percent of the company's retained earnings worth? ? Assume the company is considering using an amount equal to 10 percent of its retained earnings to invest in one of the two mutually exclusive projects: 1) The first project will generate cash flows o
Suppose that a Swiss watchmaker imports watch components from Sweden and exports watches to the United States.
I am in need of assistance with the following two questions from my MBA Economics class. I am having difficulty grasping this material and wondered if someone could help me understand this better in a brief and easy to follow way. Thank you for your help. Suppose that a Swiss watchmaker imports watch components from Sweden
Congratulations, you just won the Irish Lottery! You bought a ticket while you were on vacation in Ireland, and you just won a 1 million Euro jackpot after all taxes were taken out. 1. If the current exchange rate is US$1 equals 1.25 Euros, how much did you win in US dollars? 2. Suppose that the interest rate in Irish banks
- Prices and Price elasticity of demand. - Supply and demand analysis. - Productivity and Cost structure. - Competitors and impact of new companies entering the market. - Market structure. - Group of final recommendations on price and production. Again, I am looking for guides on how to tackle the above problems (wh
5. You note that Sony stock is selling at $25. Each month, it either goes up 10% or down 8%. The interest rate is 1% per month. a. What is the value of a two-month call option to buy Sony at $26? b. What is the value of a two-month put option with an exercise price of $26? 6. You note that platinum sells for $750 pe
Financial Economics: Arbitrage among gold future contracts, Value of call options using Binomial tree
3. The current interest rate is 5 percent per year. You can treat it as 2.5% per six months. You can borrow or lend at this interest rate. The futures contract for gold six months in the future is selling for $346.30, whereas the futures contract 12 months in the future is selling for $360.00. Is there an arbitrage opportun
Please see the attached file. 1. This problem requires you to use the Black-Scholes formula. A call option with X=$50 on a stock currently priced at S=$55 is selling for $10. Using a volatility estimate of sigma = .30, you find that N(d1) = .6 and N(d2) = .5. The risk free rate is zero. Is the implied volatility based on the op
If supply decreases along a given demand curve, a. an excess quantity demanded will be created, increasing the equilibrium price and causing equilibrium quantity to fall b. an excess quantity supplied will be created, lowering the equilibrium price and causing equilibrium quantity to rise c. an excess quantity demanded will b
Smith can operate his saw mill with or without soundproofing. Operation without soundproofing results in noise damage to his neighbor Jones. The relevant gains and loses for Smith and Jones are listed in the table: Without soundproofing With soundproofing Gains to Smith...........................$15
Need help with analysis of a sequential decision problem with decision tree; Need to draw a decision tree for all possibilities. Mr. Warren operated a real estate agency that specialized in finding buyers for commercial properties. Warren was approached one day by a prospective client, who had three properties that he wi
Article Report on THE IMPORTANCE OF MONETARY POLICY.
31. What is implied when the total cost of producing Q1 and Q2 together is less than the total cost of producing Q1 and Q2 separately? a) Economies of scale. b) Diminishing average fixed costs. c) Diseconomies of scale. d) Economies of scope. 32. The minimum average cost of producing alternate levels of output, allowi
You are an arbitrageur in London. Swiss francs are presently selling in London for U.S. $0.67. You anticipate that they will increase in value and be selling for U.S. $0.70 in 30 days. You purchase $1 million worth of francs on the spot market. Is there anything that you can do to hedge your bet? That is, is there some way to en
Research how wage inequality is measured and if it is present in the airline industry. - Are there any current or past news events related to wage inequality in this industry? Explain. - What was the industry's method for determining that there was an inequality? Explain.
Task 3a: Problem Set Directions: Type your answer to each question where indicated. Use more space if needed. 1. On Monday morning, an investor takes a long position in pound futures contract that matures on Wednesday afternoon. The agreed-upon price is $1.78 for 62,500 pound sterling. At the close of trading on Monday,
How might a portfolio manager use financial futures to hedge risk in each of the following circumstances:
How might a portfolio manager use financial futures to hedge risk in each of the following circumstances: a. You own a large position in a relatively illiquid bond that you want to sell. b. You have a large gain on one of your long Treasuries and want to sell it, but you would like to defer the gain until the next accounting p
Business AB makes Keyboards for laptop computers for sales to computer manufacturers (OEMs). Account information shows the total cost of producing four potential quantities of keyboard: Quantities of keyboard 50,000 100,000 150,000 200,000 Materials $ 125,000 $ 250,000 $ 375,000 $ 500,000 Leasing of Machinery
Part 1 - How would international trade function if there were no foreign exchange markets? Part 2 - If only spot markets existed, how would international trade function? Part 3 - Who are the major participants in the foreign exchange market? Part 4 - What are the effects of an appreciating/depreciating exchange rate
16) You purchased the following futures contract today at the settlement price listed in the Wall Street Journal. Answer the questions below regarding the contract. Soybean Oil (CBT) 60,000 lbs.; cents per lb. Lifetime Open High Low Settle Change High Low Open Interest Oct. 15.28 15.33 15.25 15.29 -.02 20.35 15.
10) With regard to market efficiency, what is meant by the term "anomaly"? Give three examples of market anomalies and explain why each is considered to be an anomaly. 11) Suppose that all investors expect that interest rates for the 4 years will be as follows: Year Forward Interest Rate 0(today) 5% 1 7% 2 9% 3
Among the roadside stores of a middle class suburb, there used to be two drugstores, approximately the same size. One was on the side of the main road where traffic was the busiest in the morning; the other was on the opposite side of the road. They were about 50 meters apart. After many years of competing, the two businesses were merged and the shop on the busy-morning side of the road was shut down. Why did the owners of these businesses decide to do this? Could this decision be explained by the concept of economies of scale?'
Among the roadside stores of a middle class suburb, there used to be two drugstores, approximately the same size. One was on the side of the main road where traffic was the busiest in the morning; the other was on the opposite side of the road. They were about 50 meters apart. After many years of competing, the two businesses we
Tradesports.com has introduced a number of political contracts for the 2008 U.S. election already (!). Below is the current information for a bet that Barack Obama will win the 2008 U.S. Presidential election. Part A: How do these prediction markets rely on the three general purpose technologies that underlie the growth
Senator Rick Santorum (R-PA) has suggested de-funding the National Weather Service, arguing that households receive weather information from media outlets and businesses can receive subscription (paid) weather forecasts from private weather forecasting firms. Consider the externality/public good aspects of weather forecasts and
1. Suppose that in a market there are only two drug dealers, A and B, who sell a homogenous product. Each dealer has a constant marginal cost of 10. Consider the possibility that the two dealers will coordinate their activities in order to increase their profits. The cartel agreement would have each dealer restrict its output so
Moral Hazard Model. Only Question #1. See attached file for full problem description.
1) The worlds most actively traded commodity is crude oil. New York Mercantile Exchange (NYMEX) is the largest market for future oil contracts, both light sweet and brent. Contracts are traded in units of 1000 barrels. Currently, non-member initial margin is $4,725 per contract. The Maintenance requirement is $3,500. Suppose you
1. Draw a demand curve. What is the relationship of price to demand? Draw a supply curve. What is the relationship of price to supply? Illustrate equilibrium of supply and demand with a graph. What is equilibrium? Show a shift in demand on your graph. What causes a change in demand? What causes a shift in demand? Pro
Place an 'M' beside the items in the following list that describe a mortal hazard problem and an 'A' beside those that describe an adverse selection problem:
Place an 'M' beside the items in the following list that describe a mortal hazard problem and an 'A' beside those that describe an adverse selection problem: a. A person with a terminally illness buys several life insurance policies through the email. b. A person drives carelessly because he or she has automobile insurance.
Please see full description of the problem in the attached file.
You enter into a forward contract to buy a 10 year, zero-coupon bond that will be issued in one year. The face value of the bond is $1,000, and the 1 year and 11 year spot interest rates are 4% per annum and 9% per annum respectively. Both of these interest rates are expressed as effective annual yields (EAY's). a) What is