If the call option were selling at $4, what would you do to create a riskless arbitrage strategy? Explain how the strategy is maintained over the two binomial periods assuming the underlying asset price declines in the first period. Construct a table to demonstrate the exact strategy and the cashflows from the strategy. S0 = 10, T = 2 months, u = 1.5, d = 0.5, r = 0.05, K = 7, D=0.

A company has just paid its first dividend of $4.01. Next year's dividend is forecast to grow by 10 percent, followed by another 10 per cent growth in year two. From year three onwards dividends are expected to grow by 3.3 percent per annum, indefinitely. Investors require a rate of return of 18 percent p.a. for investments of this type. The current price of the share is (round to nearest cent)

Talcville Farms just paid a dividend of $3.36 on its stock. The growth rate in dividends is expected to be a constant 5.8% per year indefinitely. Investors require a 15.8% return on the stock for the first three years, a 13.8% return for the next three years, and an 11.8% return thereafter. What is the current share price? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

You are part of the board of directors of H&M based in the Philippines. Revenue is dropping in the first quarter of the year due to high production costs. Your task is to come up with a solution to lower the cost of production while simultaneously maintaining the same price point and expanding other markets all over the country

You may want to take into consideration the following theme:

- Branch Location:

- Worker compensation:

- Consumer location:

Which of the below are possible reasons for why some IPOs are underpriced [i.e., the price rises a lot on the first day]?

It is necessary to compensate investors for risks of buying the security, including both “market timing” by firms and the “winner’s curse”

To minimize the underwriter fees paid by the issuer and maximize the amount of capital the firm is able to raise

Because of a conflict of interest between underwriters and the issuer

Only (a) and (b)

Only (a) and (c)

All of the above

Because of the declining demand for your ethanol product and difficulties in purchasing corn from U.S. farmers at a reasonable price you are considering moving your production facility to a foreign location. In the evaluation of this possibility you want to address two initial concerns. First, should foreign capital be used to meet the cost of relocating your facility? Second, what is the best way to finance this new project if foreign capital is used?

Bill is comparing the risk of two bonds. Both bonds were issued by Whole Giant Foods. The first bond has a 9% coupon and the second bond has a 7% coupon. Both bonds have 6 years remaining until maturity and a yield to maturity of 6%.. If market interest rates decrease by 2%, what is the percent price change for each of these bonds? Please show your work

Annual Coupon

Consider 2 airplane manufacturers that compete as Cournot duopolists in the market for commercial aircraft. Arrowing (firm A) has a cost function given by ?(??)=?/???, whereas SkyTrain (firm S) has a cost function given by ?(??)=?/???^?. The market demand function for commercial airliners is given by:?=???−?? where ?is the sum of the quantity of planes available for purchase.

a)If firm A chooses output first, find the Stackelberg equilibrium quantities supplied by each firm and find the equilibrium price.

2009 2012 2013

Product Quantity Price Quantity Price Quantity Price

MP3s 40 $250.00 45 $200.00 50 $150.00

Tacos 2,000 2.00 2,200 2.25 2,300 2.40

Coats 300 50.00 310 52.00 350 55.00

Consider the data above for a simple economy: Using 2009 as the base year, calculate nominal GDP, real GDP, and the GDP deflator for 2013, Growth rate. Show your work

Since real GDP is adjusted for inflation and nominal GDP is not, nominal GDP must always be higher than real GDP. Do you agree or disagree? Why?

What roles do price-offer configuration, price metrics, price fences and gain-loss framing play in segmented structures, and how do they affect a pricing decision?