Thư viện tài liệu, ebook tham khảo dành cho học sinh, sinh viên

“Simple interest” means no discount or add-on. Interest = 0.08($100,000) = $8,000 kNOM = EAR = $8,000 / $100,000 = 8.0% For a 1-year simple interest loan, kNOM = EAR

24 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 758 | Lượt tải: 0

Many modern portfolio managers actively practice some form of delta management Delta management refers to any investment practice that monitors position delta and seeks to maintain it within a certain range Delta is a direct measure of the “degree of bullishness” represented in a particular security position or portfolio

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Float is the difference between cash as shown on the firm’s books and on its bank’s books. If SKI collects checks in 2 days but those to whom SKI writes checks don’t process them for 6 days, then SKI will have 4 days of net float. If a firm with 4 days of net float writes and receives $1 million of checks per day, it would be able to operate with...

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Like other puts and calls, futures options have both intrinsic value and time value Expiration The option month refers to the futures contract delivery month Depending on the commodity, the option may expire on a specific date in the preceding month The actual expiration date varies by commodity Some futures options have a serial expiration fe...

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If the fixed rate in our at-the-market swap example was 5.75% instead of 5.62% The value of the floating rate side would not change The value of the fixed rate side would be lower than the floating rate side The swap has value to the floating rate payer

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Shareholders can automatically reinvest their dividends in shares of the company’s common stock. Get more stock than cash. There are two types of plans: Open market New stock

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P0 is maximized ($26.89) at D/A = $500,000/$2,000,000 = 25%, so optimal D/A = 25%. EPS is maximized at 50%, but primary interest is stock price, not E(EPS). The example shows that we can push up E(EPS) by using more debt, but the risk resulting from increased leverage more than offsets the benefit of higher E(EPS).

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The company does not have the option to delay the project. The company may abandon the project after a year, if the customer has not adopted the product. If the project is abandoned, there will be no operating costs incurred nor cash inflows received after the first year.

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The higher the duration, the higher the level of interest rate risk If interest rates are expected to rise, a bond portfolio manager may choose to bear some interest rate risk (duration shifting)

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1 2 3 4 Revenues 210 220 232 243 Op. Costs (60%) -126 -132 -139 -146 - Deprn Expense -79 -108 -36 -17 - Oper. Income (BT) 5 -20 57 80 - Tax (40%) 2 -8 23 32 Oper. Income (AT) 3 -12 34 48 + Deprn Expense 79 108 36 17 Operating CF 82 96 70 65

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