Applications of option pricing in corporate finance Option pricing is used in four major areas of corporate finance: • Real Options Suppose a company has a 1-year proprietary license to develop a software application for use in a new generation of wireless cellular telephones. Hiring programmers and marketing consultants to complete the project will cost $30 million. The good news is that if consumers love the new cell phones‚ there will be a tremendous demand for the software. The bad news
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Chapter 2: Review of Related Literature and Studies This represents the review of foreign and local literature and studies that help the proponents to get more information that would support and complete their study. The ideas presented will be a guide to determine relevant matters on the course of the study being undertaken. Related Literature Local Literature Government Text Message System Information needs to be fast and accurate‚ in order for us to prevent or act quickly during
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set forth in writing and made under seal. Kinds of Bond 1. Government Bonds - are those issued by the government to finance its activities. 2. Corporate Bonds - are those issued by private corporations to finance their long -term funding requirements. Bonds as Distinguished from Stocks 1. A bond is a debt instrument while stock is an instrument of ownership. 2. Bondholders have priority over stockholders when payments are made by the company. 3. Interest payments due to bonds are
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Case Questions for MGM 828‚ Fall 2012 Case 1: The Euro in Crisis a) Evaluate the European Central Bank’s (ECB) response to the financial crisis of 2008-2010. What was their analysis of the problem? b) The ECB responded less aggressively than the US Federal Reserve to the crisis. Why? c) In May 2010‚ should the ECB agree to purchase Greek sovereign debt? Case 2: Foreign Ownership of US Treasury Securities a) Why is foreign ownership of US Treasury securities rising? It is more interesting
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Chapter 2 Principles of Waterflooding 2.3 Overall Recovery Efficiency 1 2.3 Overall Recovery Efficiency Displacement Efficiency Areal Sweep Efficiency Vertical Sweep Efficiency 2 2.3 Overall Recovery Efficiency The micromodel saturated with oil The micromodel after water flooding 3 2.3 Overall Recovery Efficiency • overall recovery factor (efficiency) RF Def: the fraction of oil produced from the initial oil in place at the start of the flood. RF ED E A EV ED displacement efficiency
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A Mini Case of Little Stone Comapny Question-1 Big Rock Corporation (BRC) announces a tender offer for all the shares of Little Stone Company (LSC) for $16 per share. The pre-announcement (one month before) price of LSC was $12. LSC stock quickly rose to $15.50. Previous similar acquisitions by peers paid an average premium of 20%. Financial information on Little Stone Company: Beta 1.5 Stock market risk premium 11% Risk free rate 3% Current interest rate on debt 15%
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Which of the following is incorrect‚ regarding the beta? Select one: a. Beta for market portfolio is less than one b. Assets with beta less than one are said to have lower systematic risk c. Beta is a measure of total risk d. Beta for market portfolio is less than one and beta is a measure of total risk Shares in Flamingo Hotel Holdings have a beta of 2.7. If the expected return on the market portfolio is 8.2% and the risk free rate is 3.3%‚ what return should investors demand on Flamingo
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MHR Required Reading Notes Week #2 _ Chapter 4_P.92-108 Employees behaviors and attitudes reflect more about the company than the employee’s character Job satisfaction affects employees behavior Emotion in the work place Influence everything OB theories assume that thoughts and actions are governed exclusively by “logical thinking” Cognition Attitude‚ decisions and behaviors are affected by both Cognition and Emotions Emotions: Physiological‚ behavioral‚ psychological experience
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CHAPTER 2 RELATED STUDIES AND LITERATURE In an article entitled “What is College?” John C. Hitt‚ President of the University of Central Florida stated that College sharpened his love of history‚ and he continued to be an eager reader of historical fiction and non-fiction books. It also taught him the value of analysis and to think critically. He said that his college experience helped fulfill his father’s dream for him. Today‚ higher education remains the best way for parents to transform dreams
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Chapter 1 Starting up a Proprietorship Proprietorship-an unincorporated business owned by one individual Easy to start Three advantages o Easily and inexpensively formed o Few government regulations o Its income is not subject to public taxation Three limitations o May be difficult for them to obtain capital needed for growth o Proprietor has unlimited personal liability o Life of a proprietorship is limited to the life of the founder Used primarily for small businesses Only account for
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