1. Suppose a firm restructures to become all-equity, what can we say about the beta of the firm? (previously, the firm had a debt-equity ratio of 0.625 and beta of 1.5 before repaying debt which yielded 2%)
2. A bank's operational risk includes the risk of very large losses because of employee fraud, natural disasters, litigation, and so on. Do you think operational risk is best handled by risk decomposition or risk aggregation?
3. MS, a U. S.- based software firm, has receivables of CHF 1.1 million and payables of EUR 1.8 million in six months. CHFUSD is expected to trade in a range between 1.0 and 1.1. EURUSD is expected to trade in a range between 1.1 and 1.3. Estimate best-case scenario.