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a firm has expected before-tax earnings of 20 per year forever starting next year the firm is in the 25 tax bracketa if
your firm is in a 40 combined federal and state marginal income tax bracket your annual income is 500000 per year for 2
you can take a 1 million project however this kind of project is ordinary income for you and it will produce either
a firm would have to invest 1 million to earn a net return of 500 million next year the firm estimates its debt cost of
construct a pro forma for the following firm a 4-year project costs 150 in year 1 not year 0 and produces 70 in year 1
suppose that each day during july the minimum temperature is 68deg fahrenheit and the maximum temperature is 82deg
an insurance companys losses of a particular type are to a reasonable approximation normally distributed with a mean of
1 what are the formulas foro the basis break-even equation px vx fc profit and x fcpo the basis breakeven equation
the market price of risk for copper is 05 the volatility of copper prices is 20 per annum the spot price is 80 cents
1 derive a relationship between the convenience yield of a commodity and its market price of risk2 the correlation
suppose that the cir process for short-rate movement in the risk-neutral world isand the market price of interest rate
the payoff from a derivative will occur in 8 years it will equal the average of the 1-year interest rates observed at
suppose that short rate r is 4 and its real-world process iswhile the risk-neutral process isa what is the market price
calculate the price of a cap on the 90-day libor rate in 9 months time when the principal amount is 1000 use blacks
explain how you would value a derivative that pays off 100r in 5 years where r is the 1-year interest rate annually
the yield curve is flat at 10 per annum with annual compounding calculate the value of an instrument where in 5 years
a call option provides a payoff at time t of maxst - k 0 yen where st is the dollar price of gold at time t and k is
a 3-year convertible bond with a face value of 100 has been issued by company abc it pays a coupon of 5 at the end of
1 how is the market price of risk defined for a variable that is not the price of an investment asset2 suppose that the
consider two securities both of which are dependent on the same market variablethe expected returns from the securities
an oil company is set up solely for the purpose of exploring for oil in a certain small area of texas its value depends
deduce the differential equation for a derivative dependent on the prices of two nondividend-paying traded securities
a securitys price is positively dependent on two variables the price of copper and the yendollar exchange rate suppose
1 a company caps 3-month libor at 10 per annum the principal amount is 20 million on a reset date 3-month libor is 12
calculate the price of an option that caps the 3-month rate starting in 15 months time at 13 quoted with quarterly