Control
Shift
Enter
LINEST(B134:B193,OFFSET($T134,0,($E$4-1):OFFSET($T193,0,($E$4-1) Then average
LINEST(OFFSET(B133,0,($E$5-1)*6):OFFSET(G133,0,($E$5-1)*6),OFFSET(B259,0,($E$5-1)*6):OFFSET(G259,0,($E$51)*6) Market Index: The CRSP value-weighted portfolio

This program establishes a five period lattice for the present values of a project. ( Table 1). In Table 2 we consider an abandonment option. The firm
has obtained a strategic option that allows them to sell their technology at any point in time for a fix

NAME _[5pts]
BAFI 430
Final Exam
Spring 2008
You can print out the exam, and hand write in your solutions, or you can copy the exam
into another word file and type in your solutions. I do not want to see any excel
spreadsheets. But please make sure you ha

Practice Problems
Question 1 15 points
M & I issued a mandatory convertible bond. The bond matures in 1 year. The
payout of the bond is contingent on the stock price of M & I. In particular, each
bondholder would receive a certain number of shares dependi

Corporate Securities
Problem 1
A firm has assets of $100m. The volatility of the assets is 30%. The risk free rate is 6%,
continuously compounded. The firm makes no payouts prior to the maturity date of the
debt. The firm has a single debt issue with a ma

The Binomial Option Model
I have given you several practice problems to work on with solutions. You should
make sure that you fully understand each of these problems before you start your
homework. The homework problems follow at the end of this handout
G

Value at risk is a single, summary, statistical measure of possible portfolio losses.
Specifically, value at risk is a measure of losses due to normal market movements. Losses
greater than the value at risk are suffered only with a specified small probabi

Real Options.
Solved Problems and Solution Set to HW)
I have given you several practice problems to work on with solutions. You should make sure that you fully
1
Problem 1: The Option to Expand
NBC has the rights to televise the Winter Olympics in 2 years