Traditional and derivative instruments
Question 1: What are the differences between traditional and derivative instruments?
Question 2: Why do companies use derivative instruments? Are derivatives a good investment? Why or why not?
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Calculate Company B's weighted average cost of equity, given the following information:
If you are an American, and you agree to pay 100 Euro to another person in 6 months, who bears the currency fluctuation risk
What is the present value of the following future amounts?
Use your findings in parts (1) and (2) to evaluate and discuss the return and risk associated with each stock. Which stock appears to be preferable? Explain.
What is the equity beta after the company has repurchased the shares and issued debt?
Assume interest rates on 10-year government and corporate bonds were as follows:
Based on the following information, calculate the required return based on the CAPM:
Briefly explain how the exchange rate risk affects the capital budgeting decisions of multinational companies.
The controller identified three areas in which company X has some flexibility in its accounting assumptions:
Inflation and Exchange Rates. Suppose the current exchange rate for the Russian ruble is ruble 29.15.
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