maximize returns 2 HEDGE FUND STRATEGIES Option Based Short-Selling Leverage • Extreme volatility in the • Used to eliminate market • By using debt to finance a portion of assets‚ RoE is greater general market risk from the fund • Beta of portfolio dynamic‚ changing rapidly in high volatility market • Expected Return = α + β ( Market Return) • Options can better immunize against market fluctuations • Removes market return component‚ leaving only alpha return in the portfolio
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MW Petroleum Corporation Situation Overview: Amoco Corporation conducted an extensive review of its cost structure and profitability‚ leading to major restructurings to better focus on its core businesses. The result of this was a divestment of the middle section of its assets along the marginal curve. Thus‚ creating MW Petroleum Corporation – a new‚ free-standing exploration and production oil and gas company. MW was offered to a number of targeted international petroleum concerns‚ but the most
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Cox Communications‚ Inc. Applied Corporate Finance Prof. José Neves Adelino Prof. Carla Peixoto Prof. André Fernando Group 9 Ana Rita Miranda 472 Carolina Oliveira 423 Henrique Queiroz 453 João Santos 438 Tiago Pinho 403 Applied Corporate Finance Executive Summary By mid-1999‚ Cox Communications‚ majority-owned by the Cox family‚ was about to take its first step into a planned $7Bn acquisition spree‚ which would let it stand as a top-tier communication sector firm in the coming years
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STATEMENT OF THE PROBLEM Star River Electronics Ltd. is a large manufacturer and supplier of CD-ROMS. It was founded as a joint venture between New Era Partners and Starlight Electronics Ltd. It has enjoyed a great deal of success in the past decade‚ due in large part to their excellent reputation. Star River does need to address several issues with the recent resignation of their former CEO. Digital Video Disks are expected to cut into the CD-ROM market in the very near future‚ and with only 5%
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MBA 509 Recommended Chapter Questions These questions are the focus of what I am covering on the final exam. Understand the answers to these questions and should not be surprised by anything on the exam. Chapter 14: Capital Structure in a Perfect Market 14-5. Suppose Alpha Industries and Omega Technologies have identical assets that generate identical cash flows. Alpha Industries is an all-equity firm‚ with 10 million shares outstanding that trade for a price of$22 per share. Omega Technologies
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increasing competition. But we still continue with the “0” ∆ Net Working Capital assumption of John Adams. 2) WACC Estimate: John Adams used the following parameters/assumptions in his WACC calculations: Rf: 7% Market Risk Premium (“MRM”): 7% Beta Arch: 1.6 Borrowing Rate: 11% Eqity/Debt Ratio: 40% / 60% And based on these: Re= Rf+ βArch x MRP = 7% + 1.6 x 7% = 18.2 % WACC = 0.4 x Re + 0.6 x Rd and accepted tax shield from cost of debt as “0” due to the “0” tax cost of the company during
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Bidding on the Yell Group 1. Introduction Yell Group consists of two businesses that are operating across countries. Yellow Page is a classified directory business in the UK‚ while Yellow Book is an independent directory business in the USA. These businesses are currently owned by British Telecom which is under pressure to reduce its heavy debt load and had been wavering for months about the future of these two Yellow Pages divisions. Apax Partner and Hick Muse are two private equity firms
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CFS WRITE UP ON CASE 6 BY SUSHMA T Session 6 – Structuring Repsol’s Acquisition of YPF Suggested Questions: 1) How significant are the expected synergies and restructuring effects? Please prepare an estimate of the value of these. For Repsol and its shareholders‚ the YPF acquisition deal is seen as an ideal strategic match. The Spanish oil company gets most of its revenues from activities like refining and gasoline stations‚ and must buy much of its crude oil from others‚ while YPF owns
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45%. We will estimate beta equity using data of comparable firms‚ focusing on production only sodium chlorate: Brunswick Chemical and Sothern Chemicals. To calculate beta asset we’ll use information about beta equity and equity-to-value ratio. As well we assume that debt beta equals zero: To adjust beta in accordance with project we assume that in the long-run Dixon will maintain its target debt-to-capital ratio in proportion of 35%. Thus‚ we get the following beta asset of the project that
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Marriott Corporation Abstract Marriott Corporation has three divisions – lodging‚ contract services and restaurants – with dissimilar operations. The company uses three separate hurdle rates for the three divisions to value the proposed projects. It is believed that this strategy is more appropriate that using a single firm-wide discount rate because the operations of the three divisions differ drastically. However‚ the company has to ensure that the company uses an appropriate discount rate for
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