your bid conforms to bidding structure set forth in the case. Then prepare a memo addressing the following questions: 1) How would we express the right to develop a mine as an option? a. What is the underlying? What is the strike‚ or exercise price? What is the maturity in this case? b. What if we get 2 years out and we learn that the PV of a developed mine turns out to be 0? What do we do at that point? What is our payoff? c. What if the PV of a developed mine
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Chapter 14 14.3. Explain the principle of risk-neutral valuation. The price of an option or other derivative when expressed in terms of the price of the underlying stock is independent of risk preferences. Options therefore have the same value in a risk-neutral world as they do in the real world. We may therefore assume that the world is risk neutral for the purposes of valuing options. This simplifies the analysis. In a risk-neutral world all securities have an expected return equal to risk-free
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Student Number: Assignment Title: Course Code: Course Title: Section #: 999346845 Assignment 16 RSM 1331 Finance I: Capital Markets & Valuation 1 2 AM 3 PM 4 5 In submitting this work for grading‚ I confirm: • That the work is original‚ and due credit is given to others where appropriate • Acceptance and acknowledgement that assignments found to be plagiarized in any way will be subject to sanctions under the University’s Code of Behaviour on Academic Matters. Please pay attention to the course
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Fabiana Byles The Great Railroad Strike of 1877 September 21‚ 2014 Scharfenberg The Strike of the Railroads The Great Railroad Strike of 1877 was a huge protest of railroad workers that spread across the United States. These strikes were started due to wage cuts in the Baltimore and Ohio (B&O) Railroad. This was a violent protest in the B&O station in West Virginia‚ Pittsburgh‚ Chicago‚ Maryland and Ohio. Labor was able to unionize by the workers working together in demonstrations but they
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Fin 4910/6990 Further Questions Problem 7.19 (a) Company A has been offered the rates shown in Table 7.3. It can borrow for three years at 6.45%. What floating rate can it swap this fixed rate into? (b) Company B has been offered the rates shown in Table 7.3. It can borrow for 5 years at LIBOR plus 75 basis points. What fixed rate can it swap this floating rate into? (a) Company A can pay LIBOR and receive 6.21% for three years. It can therefore exchange a loan at 6.45% into a loan at LIBOR plus
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intrinsic value and the red line shows our real operation reflects on the portfolio. At the end of January‚ if unhedged‚ the price was $19.5‚ therefore it should be ($20-$19.5)*100‚000=$50‚000‚ but our result is less than $5‚000‚ so our hedging had some effects but not hedging the portfolio to a large extend. And the same circumstance occurred at the end of February‚ if unhedged‚ the price was $18‚ therefore it should be ($19.5-$18)*100‚000=$150‚000‚ but our result less than this amount. At the end of March
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Market Structure o Perfect (pure) competition Price–taking firms each with no influence over the ruling market price (see diagram below) Free entry and exist of businesses in the long run – drives down profits towards a normal profit equilibrium level Each supplier produces homogeneous products – each a perfect substitute – hence the perfectly elastic demand curve for the individual supplier Key factor - interdependent nature of pricing decisions between rival firms Each firm must consider
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2011 Should Public Servants have the right to strike? There has been much debate lately about public servant union group’s right to negotiate or collective bargain for pay and benefits for the employee’s. Some state that all workers have the right to negotiate their pay and benefits by what ever means. While other state that some employees’ positions‚ like teachers‚ police and fireman‚ are much too important to allow them to walk out or strike for better pay. Both positions are true but neither
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a specified price (= exercise price or strike price) - A Put Option gives its owner for a specified time the right to sell an underlying good at a specified price (= exercise/strike price) - An American Option permits the owner to exercise (=buy/sell the underlying) at any time before or at expiration. A European Option can be exercised only at expiration - There are always two positions in an option contract: BUYER and SELLER. The buyer of an option has to pay a “price”‚ the so-called
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or 2.0% per quarter) U.S. three month investment interest rate: 6.0% (or 1.5% per quarter) June put option in the over-the-counter (bank) market for 1‚000‚000 British pounds; Strike price $1.75 (nearly at-the money) 1.5% premium June put option in the over-the counter (bank) market for 1‚000‚000 British pounds: Strike price $1.71 (out-of-the money) 1.0% premium Dayton’s foreign exchange advisory service forecasts that the spot rate in there months will be $1.76 per British pound. Like many manufacturing
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