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What options strategy would you like to execute? Would the value of this portfolio today be positive or negative?
Task: In a gold mine, the price of gold is a major determinant of the value of the project.
The company forecasts a net income of $475,000. If it follows the residual dividend policy, what is its forecasted dividend payout ratio?
What is the "closing out" of a position in the futures markets? Why is closing out of a contracts permitted in the futures markets?
Identify and describe two financial management practices that firms use to manage each of the following:
How should this manager hedge the portfolio?
Give a specific example of a real option that the company adopted in the past or might use in the future.
The article that I have selected is called, "More pro-employee law on the way?"
Calculate the associated dollar gain or loss associated with hedging with futures vs. options.
Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure?
Which issue, A or B, has the higher effective rate of interest? How can you tell?
If you had a choice, would you pick a stock with or without dividends? Why or why not?
Use of derivatives as a risk managment tool 1. identify the main issues
What is the equivalent rate with semiannual compounding?
Expecting dividends to grow 10% annually for the next four years and 7% annually thereafter. Compute the Price of the companies stock.
How high must the stock price rise for Carol to break even on the option transaction?
The correlation between stocks A and B is 0.50, while the correlation between stocks A and C is -0.5.
The stock sells for $30 a share, and the option has an exercise price of $25 a share. What is the exercise value of the call option?
Given the circumstances surrounding Luck's current investment position, what benefits could be derived from using the puts as a hedge device?
Change the classification of the options as either financial assets or financial liabilities? Why?
If the investor also purchases the put (ie. Construct a protective put), what is the combined cash outflow?
What are your thoughts on the best methods to measure success? What about differing calls to action depending on the goals?
Question: List and discuss Real Options available to Activision-Blizzard.
List and discuss in detail Real Options available to Caribou Coffee (Real Options include: Investment Timing, Abandonment, Flexibility, Growth, etc.)
What is the effect on the total equity at the end of 2006?