Aaron's Rentals has 58,000 shares of common stock outstanding at a market price of $36 a share. The common stock just paid a $1.64 annual dividend and has a dividend growth rate of 2.8 percent. There are 12,000 shares of 6 percent preferred stock outstanding at a market price of $51 a share. The preferred stock has a par value of $100. The outstanding bonds mature in 17 years, have a total face (book) value of $750,000, a face value per bond of $1,000, and a market price of $1,011 each. The bonds pay 8 percent interest, semiannually. The tax rate is 34 percent. What is the firm's weighted average cost of capital?

Let the market demand for carbonated water be given by QD = 100 − 5P. Let there be two firms producing carbonated water, each with a constant marginal cost of 2.
a)What is the market equilibrium price and quantity when each firm behaves as a Cournot duopolist choosing quantities? What profit does each firm earn?
b)Sketch the Cournot response functions for firm 1 and firm 2.
c)What is the market equilibrium price and quantity when each firm behaves as a Bertrand duopolist choosing price? What firm profit does each firm earn now?
d)Sketch the Bertrand response functions for firm 1 and firm 2.

For the cost and price functions​ below, find

​(​a) the​ number, q, of units that produces maximum​ profit;

​(​b) the​ price, p, in dollars per unit that produces maximum​ profit; and

​(​c) the maximum​ profit, P, in dollars.

C(q)=100+20qe^-0.01q ; p=60e^-0.01q

​(a) The​ number, q, of units that produces maximum profit is $__

​(Do not round until the final answer. Then round to the nearest whole number as​ needed.)

​(b) The​ price, p, per unit that produces maximum profit is $__

​(Do not round until the final answer. Then round to the nearest cent as​ needed.)

​(c) The maximum profit is $__

​(Do not round until the final answer. Then round to the nearest cent as​ needed.)

A fund manager has just sold a call option on 100 shares of a stock. The stock price is $87 and its volatility is 20% per annum. The strike price of the option is $89 and it matures in 6 months. The risk-free rate is 6% per annum (continuously compounded).

a) What position should the fund manager take in the stock to achieve delta neutrality?

b) Suppose after the fund manager sets up the delta neutral position, the stock price suddenly jumps to 80.  Should she buy or sell shares to maintain delta neutrality? Why? Did she gain money, lose money or achieve no gain/loss on her position? Why?

An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 6%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter all amounts as positive numbers.

A simple economy produces only 3 goods: pizza, video games and candy. The prices and quantities produced for three consecutive years are given below:

d. Calculate real GDP for all years in chained-2012 dollars, that is using 2012 as the arbitrary reference year! (This will involve multiple steps - show your final results for each year clearly.)

Aaron's Rentals has 58,000 shares of common stock outstanding at a market price of $36 a share. The common stock just paid a $1.64 annual dividend and has a dividend growth rate of 2.8 percent. There are 12,000 shares of 6 percent preferred stock outstanding at a market price of $51 a share. The preferred stock has a par value of $100. The outstanding bonds mature in 17 years, have a total face value of $750,000, a face value per bond of $1,000, and a market price of $1,011 each. The bonds pay 8 percent interest, semiannually. The tax rate is 34 percent. What is the firm's weighted average cost of capital?

You took a short futures position in 10 contracts, covering each 100 ounces of gold at a price of $276.5 per ounce. The initial and the maintenance margin requirement are respectively $1500 and is $1100 per contract. No withdrawal in any excess margin will be made. Ignore any interest on the balance.

(b) The settlement prices per ounce of gold at the end of days 1, 2 and 3 are respectively $278, $281 and $276. Complete the table below assuming the contract is purchased at the settlement price of that day. [20]

Show your work with Excel and Solver:

Pizza King (PK) and Noble Greek (NG) are competitive pizza chains. PK believes there is a 30% chance that NG will charge $8 per pizza, a 50% that NG will charge $10 per pizza, and a 20% chance that NG will charge $12 per pizza. If PK charges price p1 and NG charges price p2, PK will sell 100 + 25(p2 – p1) pizzas. It costs PK $6 to make a pizza. PK is considering charging $7, $8, $9, $10, or $11 per pizza. To maximize its expected profit, what price should PK charge for a pizza?