Assignment
Question 1: Determine three methods of using stocks and options to create a risk-free hedge portfolio. Support your answer with examples of these methods being used to create a risk-free hedge portfolio.
Question 2: What sources of capital should be included when you estimate weighted average cost of capital (WACC)? Why?
Question 3: Should the component costs of a company be figured on a before-tax or an after-tax basis? Why?
Question 4: From the scenario, create a unique hypothetical weighted average cost of capital (WACC) and rate of return. Recommend whether or not the company should expand, and defend your position.