On January 1, Year 1, LL Company issued 100 stock options with an exercise price of $18 each to five employees (total 500 options). The options vest on December 31, Year 2, after the employees have completed two years of service. LL expects that all employees vest in the options.

Assume that this is the equity-settled share-based transaction. Please make all necessary journal entries from Jan. 1, Year 1 to December 31, Year2 (4 points).

Assume that this is the choice-of-settlement share-based transaction, in which the employees can choose to settle the options either (1) in shares of stock or (2) in cash. The option fair value of cash-settlement is equal to the fair value of equity-settlement. Please make all necessary journal entries from Jan. 1, Year 1 to December 31, Year 2 if all employees choose the share settlement.(5 points)

On January 1, Year 1, LL Company issued 100 stock options with an exercise price of $18 each to five employees (total 500 options). The options vest on December 31, Year 2, after the employees have completed two years of service. LL expects that all employees vest in the options.

Date Share Price Fair value of option

Jan. 1, Year 1 $21 $12

December 31, Year 1 $21 $13

December 31, year 2 $30 $15

Assume that this is the equity-settled share-based transaction. Please make all necessary journal entries from Jan. 1, Year 1 to December 31, Year2. Assume that this is the choice-of-settlement share-based transaction, in which the employees can choose to settle the options either (1) in shares of stock or (2) in cash. The option fair value of cash-settlement is equal to the fair value of equity-settlement.

Please make all necessary journal entries from Jan. 1, Year 1 to December 31, Year 2 if all employees choose the share settlement.

A. While investigating the shares offered to you by your potential boss(100 shares at stock price $50), you discover that the company you are considering working for is not
registered as required under the Securities Act of 1933. How does this influence you as a potential employee and as a potential shareholder? Be
sure to reference any applicable statutes or laws.

B. You know that accepting this job may eventually lead to a promotion into the role of the financial manager. As the potential financial manager,
what federal and shareholder requirements would you need to be familiar with in order to ensure that you are being completely compliant?

Nelson Corporation issues 6,000 shares of $100 par preferred stock at a price of $112 per share on December 31. A stock warrant is attached to each share of preferred stock that enables the holder to purchase one share of $10 par common stock for $25. Immediately after issuance, the preferred stock begins selling ex rights for $110 per share. The warrants (which expire in 30 days) also begin trading for $4 per warrant.

Required:

Prepare the journal entry to record the sale of the preferred stock on December 31. Additional Instructions

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GENERAL JOURNAL

Prepare the journal entry to record the issuance of 5,000 shares of common stock in exchange for 5,000 warrants and $25 per share on December 31. Additional Instructions

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GENERAL JOURNAL

Prepare the journal entry to record the expiration of 1,000 warrants on December 31. Additional Instructions

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GENERAL JOURNAL

Tom purchased 100 shares of Dalia Co. stock at a price of $125.01 four months ago. He sold all stocks today for $125.13. During the year the stock paid dividends of $6.32 per share. What is Tom’s effective annual rate?

Find the price (per $100 face value, rounded to 3 decimal places) of a 12% Treasury bond, 145 days before maturity, at a yield of 6.26% p.a. 1

A. While investigating the shares offered to you by your potential boss(100 shares at stock price $50), you discover that the company you are considering working for is not
registered as required under the Securities Act of 1933. How does this influence you as a potential employee and as a potential shareholder? Be
sure to reference any applicable statutes or laws.

B. You know that accepting this job may eventually lead to a promotion into the role of the financial manager. As the potential financial manager,
what federal and shareholder requirements would you need to be familiar with in order to ensure that you are being completely compliant?

Let a random sample of 100 homes sold yields a sample mean sale price of $100,000 and a sample standard deviation of $5,000. Find a 99% confidence interval for the average sale price given the information provided above.

Calculate the following:

1) Margin of error = Answer

2) x̄ ± margin error = Answer < μ < Answer

Table1 -

Common Z-values for confidence intervals

Confidence Level Zα/2

90% 1.645

95% 1.96

99% 2.58

Suppose you are bearish (pessimistic) on Dot Bomb stock, and its market price is $100 per

share. You tell your broker to sell short 1,000 shares.

(1) Suppose the broker has a 50% margin requirement on short sales and you put $50,000

in your account as margin. What will your percentage prot be if you close out your

position when Dot Bomb falls to $70 per share?

(2) Suppose the broker has a maintenance margin of 30% on short sales. How much can

the price of Dot Bomb stock rise before you get a margin call?

Price Volatility I: Given a $100 par value with a coupon rate of 8% paying semiannually, a term to maturity of 6 years; and an initial yield of 7%.

I.) What is the approximate duration using the shortcut formula by changing yields by 10 basis points?

ii.) What is the approximate convexity using the shortcut formula by changing yields by 10 basis points?