See attached. 4. Show how the total CAD cost at the end of January of hedging with an option varies under the three scenarios. (The total cost includes what you pay for the USD and what you pay for the option. You can combine this with the table in question 2.) Do you use a call or put option? Call option—pay 1.73/100 per unit in the contract (7.5m)‚ in CAD → CAD 129‚750. If exercise the call option‚ pay CAD 7‚012‚500. Total is CAD 7‚142‚250. 5. Should Pixonix hedge? (A sentence or two
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following table: Price of Asset in 6 Agreed Forward Price months Payoff to Short Forward 40 10 45 50 5 50 50 0 55 50 -5 60 (b) The payoff 50 50 -10 to a purchased put option at expiration is: Payoff to long put option = max [0‚ Strike price - Spot price at expiration]
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offered to key employees should at or above the market price‚ because the stock-option plan should be attractive to these employees. 3. I think the price might be below‚ equal‚ or above the market price. The length of time would be longer than the other two kinds of warrants. The length of time will increase as long as the exercise price increases. c. 1. Include a description of the stock being offered for sale; the option price; the time period during which the rights may be exercised; and the number
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Homework Solution2010Fall second half Ch14 18. There are several ways to approach this problem‚ but all (when done correctly!) should give approximately the same answer. We have chosen to use the regression analysis function of an electronic spreadsheet program to calculate the alpha and beta for each security. The regressions are in the following form: Security return = alpha + (beta ( market return) + error term The results are: | |Alpha
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Chapter 7 & Options 1. Assume that you sold a 100 call for $10. Calculate your profit/loss per share if the future stock prices are $80‚ $90‚ $100‚ $110. What type of investor (bullish or bearish) sell a call? Why? 2. Assume that you bought a 110 put for $11. Calculate your profit/loss per share if the future stock prices are $ $90‚ $100‚ $110‚ $120. What type of investor (bullish or bearish) buy a put? Why? 3. If a stock splits 5 for 3 how would the exchange adjust a put option contract
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development of Antamina mine a real option? Compare it to a financial option. The Antamina mine case can be modeled as a real option. An option in financial terms is the right to buy/sell something‚ it is not mandatory to buy/sell‚ is a choice that the owner can do. If you can earn with the exercise of the option‚ you use your right‚ but if it is not the case you simply do not utilize it. In this way the return derived from an option is asymmetric. In real term an option is defined as the flexibility
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Contents Chapt~ 1 ExJ>ected Utilicy and Risk Aversion ..............................................................................• ! Chapt€11" 2 Mean-Varian.ce Analysis ................................................................................................ 6 Chapter 3 CAPM‚ Atbitmge‚ and Linear Factor Models .............................................................. 12 Chapter 4 Consumption-Savings Decisions and State Pricing............................................
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Laura Martin: Real Options and the Cable Industry Group 13 Adarsh N (60) Gaurav Chand (82) Hemant Kumar (83) Prateek Gupta (99) Rohan Gupta (104) Sahil Jindal (105) Individual Contribution: 16.67% for all group members Strategic Financial Management Prof. K . Sudershan Ques 1. What is the role of Laura Martin? Consider the multiples analysis developed in Exhibits 2‚ 5 & 6. What assumptions does this analysis rely upon? Role: Laura Martin is a sell-side equity analyst at
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uses scenario analysis which are not projections‚ predictions‚ or preferences; rather‚ they are coherent and credible alternative stories about the future. These scenarios will enable managers to (1) help identify options in the future‚ (2) help time the decision to exercise the real option and (3) can provide an important input in the process of evaluating it. Scenario planning differs fundamentally from forecasting in that it accepts uncertainty‚ tries to understand it‚ and makes it part of the reasoning
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Chapter 1 Using Operations To Compete Course Introduction 1. What is Operations Management (OM) and why do we study it? 2. What is the primary goal of this textbook? A. Operations and Supply Management Across the Organization 1. Define Process: 2. Define OM in terms of one of several functions within an organization: 3. Define Supply Chain Management B. A Process View 1. Describe how processes work 2. What are nested processes
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