If 1) the expected return for Litchfield Design stock is 10.66 percent; 2) the dividend is expected to be 2.99 dollars in 2 year(s), 4.4 dollars in 4 years, and 8.08 dollars in 8 years; and 3) after the dividend is paid in 8 years, the dividend is expected to grow by 3.04 percent per year forever, then what is the current price of the stock?  If no expected dividend is mentioned for a given year, assume the expected dividend is $0 for that year.

One year ago, you bought a put option on 500,000 euros with an expiration date of one year. You paid a premium on the put option of $.03 per unit. The exercise price was $1.30. Assume that one year ago, the spot rate of the euro was $1.29, the one-year forward rate exhibited a discount of 3%, and the one-year futures price was the same as the one-year forward rate. From one year ago to today, the euro depreciated against the dollar by 2 percent. Today the put option will be exercised (if it is feasible for the buyer to do so).

a. Determine the total dollar amount of your profit or loss from your position in the put option.

b.Now assume that instead of taking a position in the put option one year ago, you sold a futures contract on 500,000 euros with a settlement date of one year. Determine the total dollar amount of your profit or loss.

14 of 16 CVC programs claimed that their primary goad was strategic, but half used financial measures such as cash-on-cash returns or IRR to gauge the success of an investment. Is the generation of “cash” a strategic goal for most strategic investors? Please answer in 2-3 paragraphs

TIPS or Treasury Inflation Protection Securities incur what kind of risk(s): default risk, interest rate risk, call risk, purchasing power risk, reinvestment risk, or liquidity risk.

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.6%. The probability distributions of the risky funds are:

Expected Return Standard Deviation

Stock fund (S) 17% 46%

Bond fund (B) 8% 40%

The correlation between the fund returns is .0600. What is the reward-to-volatility ratio of the best feasible CAL? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Reward-to-volatility ratio

Oil Well Supply offers a 7 percent coupon bond with semiannual payments and a yield to maturity of 7.73 percent. The bonds mature in 9 years. What is the market price per bond if the face value is $1,000?

$1,401.26

$1,016.95

$1,401.86

$953.88

$953.28

Discussion 1 – due 23 February 2020, 11:55 PM ECT (5% of coursework marks)

Provide Sue with financial advice on which option has the potential to yield the highest monetary value. Support your rational with calculations using time value of money and comment on the risk return relationship for each option, assume interest rate on savings is 4% and is compounded semi-annually.

Sue James is a 55-year old accountant who works at Ernst and Young (EY) who is about to retire. She has the following decision to make:

Option A – Select a lump sum gratuity payment of $120,000 with a reduced pension of $1,750 per month.

Option B – Select a monthly pension of $3,300 with no lump sum gratuity payment.

In addition, Sue has a loan of $72,000 with loan payments of $1,200 per month for the next five years.

word limit 200 words

Instruction:   The table consists of information about 2 competing investments.                  
                      
Economy    Probability   Project A           Project B  
       Profit     Expected Value       Profit     Expected Value
Weak   15.0%   $10.00           -$25.00  
OK   55.0%   $30.00           $0.00  
Good    20.0%   $50.00           $100.00  
Excellent   10.0%   $70.00           $200.00  
   100%                  
                      
Part 1 - calculate the expected value for each project.           3 points per answer          
                      
part 2 - which do you select?           Why?          
                      
                      

________ 16.   According to the Rule of 72, it will take _____ years to double your money at a 6.4 percent rate of interest.

                         a. 11.25 years b. 11.33 years                         c. 11.67 years                   d. 12.00 years

________ 17.   Your current annual salary is $97,400. Your first job paid $22,500. How many years have you been

                         employed if your average annual salary increase has been 4.2 percent?

                         a. 26.87 years b. 31.15 years                         c. 32.01 years                   d. 35.62 years

________ 18.   Which one of the following statements is correct, all else held constant?

                         a.    The future value will decrease if the interest rate is increased.

                         b. The present value is directly related to the interest rate.

                         c. An increase in the interest rate will increase the time period.

                         d. The future value and the present value are directly related.

________ 19.   Ten years ago, Zenia had a population of 4.6 million residents. Today, there are 6.3 million residents of

                         Zenia. What is the annual rate of population growth?

                         a. 2.68 percent               b. 2.94 percent                        c. 3.19 percent                  d. 4.27 percent

________ 20.   A farmer currently produces 45,000 bushels of corn a year. He can increase his harvest by an average rate of

                         3 percent annually. How long will it be until the farmer can produce 50,000 bushels of corn each year?

                         a. 3.07 years b. 3.56 years                           c. 3.80 years                     d. 4.14 years

A firm that purchases electricity from the local utility is considering installing a steam generator. A large generator costs $300,000 whereas a small generator costs $240,000. The cost of operating the generator would be $100,000 per year for the large and $135,000 for the small. Either generator will last for five years. The cost of capital is 9%. For each generator option, assume immediate installation, with purchase and operating costs in the current year and operating costs continuing for the next four years. Assume payments under both options at the start of each year (i.e., immediate, one year from now,..., four years from now). What is the net present value of the more attractive generator? Please round your answer to the nearest dollar. Report the NPV of cost as a negative number.

You and your spouse have decided that now is a good time to "buy vs. own." You have found a dream house that costs 278970 and you can get an loan-to-value of 89%. Your broker has lined up a traditional, fully amortizing loan at an interest rate of 6 annual, compounded 12/year for a 30 year term. What will your mortgage payments be if you buy the house?

You have taken on a new job that will be extremely intense and not leave much time for vacations. Your significant other is willing to put up with things but wants you to promise to take them on a dream vacation at the end of the 5th year. Since you haven't been able to deliver on these promises in the past, they want you to set aside enough money to cover that cruise which will cost $13835. If you can earn 5% annual, compounded monthly, how much will you have to set aside?

You are putting together a partnership and want to bring in a partner who is very focused on building up his wealth. You have run your cash flows and think you can promise to give him a constant annual dividend of 23109. Assume he can earn 6% compounded 1 times per year on his money. He wants to know what the investment will accumulate to if you run the partnership for 8 years. What will he have accumulated in his account by then?

You are worried about the future of social security and want to start saving. You think you can set aside $1606 per month. You have been offered an investment product on which you can earn 3% annually compounded 12 times per year. How much will this accumulate to if you plan to retire at the end of the 10th year?

There is an investment that returned 7.6% while having a 7.4 PE ratio and a risk evaluation of 1. Estimate the return on this investment assuming its 7.4 PE ratio and Risk evaluation of 1. What is the residual compared to the actual 7.6 return? |PE Ratio Risk Return |7.4 1.0 7.6 11.1 1.3 13.0 8.7 1.1 8.9 11.2 1.2 10.9 11.6 1.7 12.1 12.2 1.3 12.8 12.5 1.2 11.3 12.5 1.3 14.1 13.0 1.6 14.8 13.4 1.4 16.7

PLEASE SHOW STEPS AND BASIC FORMULAS USED FOR EQUATIONS AND CALCULATIONS.PREVIOUS CHEGG ANSWER CANNOT BE COMPREHENDED.

1. A 25-year, 5% coupon bond, pays interest semi-annually, and is priced to yield 5%.

a. What is its approximate modified duration for 100bps change in yield?

b. What is its approximate convexity for 100bps change in yield?

c. Using its approximate modified duration alone, how much (in % terms) do you expect the price of this bond to change if interest rates increase by 200bps?

d. Using its modified duration and convexity, how much (in % terms) do you expect the price of this bond to change if interest rates increase by 200bps?

e. Compare the actual expected change in the value of the bond if yields across the yield curve increased by 200bps for this issuer vs. the answer obtained in part d above.

1. What do you think would happen to interest rates in the US if the US government deficits increase? What if foreign investors reduce their purchases of 10-year treasuries? Explain briefly.

2. What is the difference between tailoring and tapering?

Blue Eagle Aviation stock has an expected annual return of 9.59 percent. The stock is currently priced at 68.72 dollars per share and has an expected dividend yield of 4.16 percent. What is the price of the stock expected to be in 1 year?