FM11 Ch 08 Financial Options and Their Valuation

... leverage provided by options as the underlying stock price increases, and the greater loss potential of options at higher option prices 8 - 13 What are the assumptions of the Black-Scholes Option Pricing ... for the sale/purchase of either the stock or the option  RRF is known and constant during the option’s life (More ) - 14  Security buyers may borrow any fraction of the purchas...

Ngày tải lên: 06/04/2015, 19:41

... long-term options with maturities of up to 1/2 years 8- 8 Consider the following data: Exercise price = $25 Stock Price Call Option Price $25 $ 3.00 30 7.50 35 12.00 40 16.50 45 21.00 50 25.50 8- 9 ... declining degree of leverage provided by options as the underlying stock price increases, and the greater loss potential of options at higher option prices 8 - 13 What are the assum...

Ngày tải lên: 30/10/2014, 08:23

... 14 - Financial Planning and Pro Forma Statements  Three important uses: Forecast the amount of external financing that will be required Evaluate the impact that changes in the ... Set appropriate targets for compensation plans 14 - Steps in Financial Forecasting  Forecast sales  Project the assets needed to support sales  Project internally generated funds  Project...

Ngày tải lên: 06/04/2015, 19:41

... rs = rRF + (RPM)bi could change  Inflation expectations  Risk aversion  Company risk  g could change 7 - 35 Stock value vs changes in rs and g D1 = $2, rs = 10%, and g = 5%: P0 = D1 / (rs-g) ... 0.06 0 .07 - 15 What is the stock’s market value one year from now, ^ 1? P  D1 will have been paid, so expected dividends are D2, D3, D4 and so on Thus, D2 P1 = rs - g = $2.2427 = $32.10...

Ngày tải lên: 06/04/2015, 19:41

... S: Answers and Solutions: - Input N = 15, I = 5, PMT = 100, FV = 1000, PV = ?, PV = $1,518.98 Change N = 1, PV = ? PV = $1,047.62 2 8%: Bond L: From Bond S inputs, change N = 15 and I = 8, PV ... would be close to the going rate, and it is about what the firm would have to pay on new bonds Answers and Solutions: - ... SOLUTIONS TO END-OF-CHAPTER PROBLEMS 7-1 With your financial c...

Ngày tải lên: 01/07/2014, 21:28

... = $2.32 b Financial Calculator Solution: Input 0, 2.10, 2.21, and 2.32 into the cash flow register, input I = 12, PV = ? PV = $5.29 c Financial Calculator Solution: Input 0, 0, 0, and 34.73 into ... Answers and Solutions: - 16 Answers and Solutions: - 17 SPREADSHEET PROBLEM 8-26 The detailed solution for the spreadsheet problem is available both on the instructor’s resource CD...

Ngày tải lên: 01/07/2014, 21:28

... Bond and Their Valuation OUTPUT 10 N 13 I/YR 100 PV PMT -837.21 1000 FV 23/8/2012 B02022 - Chapter - Bond and Their Valuation PV -1,000 100 PMT 1000 FV B02022 - Chapter - Bond and Their Valuation ... Chapter - Bond and Their Valuation 33 23/8/2012 B02022 - Chapter - Bond and Their Valuation 34 What’s the bond’s nominal yield to call (YTC)? INPUTS OUTPUT B02022 -...

Ngày tải lên: 12/07/2014, 14:12

... managers, key employees, and, in many situations, venture capital providers 23/8/2012 B02022 – Chapter - Stocks and Their Valuation 23/8/2012 B02022 – Chapter - Stocks and Their Valuation What is a ... - Stocks and Their Valuation = 17 23/8/2012 0.13 - 0.06 $2.12 0.07 $30.29 B02022 – Chapter - Stocks and Their Valuation Dividend yield = D2 P1 = rs - g = 18 Fin...

Ngày tải lên: 12/07/2014, 14:12

... Bankruptcy  Two main chapters of Federal Bankruptcy Act: Chapter 11, Reorganization Chapter 7, Liquidation  Typically, company wants Chapter 11, creditors may prefer Chapter 6 - 46  If company ... 10-year bonds have the same price and reinvestment rate risk.” False! Low coupon bonds have less reinvestment rate risk but more price risk than high coupon bonds 6 - 30 Semian...

Ngày tải lên: 30/10/2014, 08:23

... optimal amount of debt capital 30 - 28 What unique problems not-forprofit businesses encounter in financial analysis and planning and short-term financial management?  In general these tasks are ... of insufficient funding, or to use more than the theoretically optimal amount of debt 30 - 14 Why is capital budgeting important to not-for-profit businesses?  The financial...

Ngày tải lên: 06/04/2015, 19:41

... creditors when liquidation does occur  Companies in bankruptcy can hurt other companies in industry 24 - 24 Chapter 24 Extension  MDA to predict bankruptcy  Recent business failures 24 - 25 What ... or assignee, and then the assets are sold off 24 - 10 Describe the following terms related to U.S bankruptcy law:  Chapter 11: Business reorganization guidelines  Chapter 7: Li...

Ngày tải lên: 06/04/2015, 19:41

... varied 12 - What are some types of real options?  Investment timing options  Growth options Expansion of existing product line New products New geographic markets 12 - Types of real options ... opportunity, and it isn’t traded (More ) 12 - How are real options different from financial options?  The payoffs for financial options are specified in the contract  Re...

Ngày tải lên: 06/04/2015, 19:41

... 19 - What agencies regulate securities markets?  The Securities and Exchange Commission (SEC) regulates:  Interstate public offerings  National stock exchanges  Trading ... fund 19 - Differentiate between a private placement and a public offering  In a private placement, such as to angels or VCs, securities are sold to a few investors rather than to the public ... in final...

Ngày tải lên: 06/04/2015, 19:41

... is reported on balance sheets 15 - Total Corporate Value  Total corporate value is sum of: Value of operations Value of nonoperating assets 15 - Claims on Corporate Value  Debtholders have ... share = $376.94 /10 = $37.69 15 - 25 Value-Based Management (VBM)  VBM is the systematic application of the corporate valuation model to all corporate decisions and strategic in...

Ngày tải lên: 06/04/2015, 19:41

... the valuation of a Spanish savings bank whose features are comparable to those of certain financial institutions already listed on the Spanish stock market The choice of a Spanish savings bank as ... International Valuation Standards (2007) valuation methods are divided into three major groups: market comparison methods or market value approach, net present value app...

Ngày tải lên: 06/03/2014, 10:20