Tài liệu Khối Ngành Kinh Tế

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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Treasury bill futures contracts call for the delivery of $1 million par value of 91-day T-bills on the delivery date of the futures contract On the day the Treasury bills are delivered, they mature in 91 days

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Find cash flow differences between the projects for each year. Enter these differences in CFLO register, then press IRR. Crossover rate = 8.68%, rounded to 8.7%. Can subtract S from L or vice versa, but better to have first CF negative. If profiles don’t cross, one project dominates the other.

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The risk premium is the component of interest rates that is most difficult to measure Risk-averse investors expect to be compensated for risks they take The price of a risky security must reflect a risk premium to entice someone to buy it The magnitude of the risk premium depends on how much risk the security carries The higher the risk premium...

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