Fair value is the worth of a security or asset, and the amount paid to transfer a liability on an
open market at a given date.
Example is Derivatives.
a) Bonds :
A type of debt offered over a defined
FINA303: Derivatives - lecture 9: Options
markets
Toby Daglish
Options: refresher
Puts - give you the right to sell a security.
Calls - give you the right to buy a security.
European - can be used
FINA303: Derivatives - Lecture 8: Currency
swaps
Toby Daglish
Currency swaps
Similar to fixed-floating swap. Each party pays interest in different
currency.
Exchange payments and also principal. Not
FINA303: Derivatives - Lecture 5: Interest
rates
Toby Daglish
Treasury Notes (US)
Example: Suppose today is 20 August 2017. A bond is described as
7 12 August 2018.
Pays $10 000 (principal or face va
FINA303: Derivatives - Lecture 6: Interest rate
futures
Toby Daglish
Forward contracts on bonds
Essentially, these work the same as with regular forward contracts.
The only difference is that we wil
FINA201: TUTORIAL 6 SOLUTION
1
a)
Using MM III and MM I, the WACC will be
B
$40m
.091 .30
.080
WACC k u 1 Tc
$100m $40m(.30)
VL
b) Using MM II, the cost of equity will be
k e k u ( k u k d )
FINA201: TUTORIAL ASSIGNMENT 5
1
2
3
4
The Alpha Corporation has a capital structure comprising default free perpetual debt (paying
$1m interest per year) and 3m ordinary shares with a market value of
FINA201: TUTORIAL ASSIGNMENT 7
1
2
Telecom Corporation is contemplating the project described in Tutorial 6, Q2.
a)
Using the standard version of the CAPM to estimate the projects cost of equity and
a
FINA201: TUTORIAL ASSIGNMENT 6
1
2
Zeta Corporation has no debt, an equity value of $100m, and a cost of equity of .09. It is
contemplating borrowing $40m to substitute for equity finance and has been
Victoria University of Wellington
Tutorials FINA 201, Trimester
Tutorial Questions Tutorial # 4 based on lectures 13 and 14
Problem 1
Assume you would have to make a capital budgeting decision. Which
FINA201: TUTORIAL 3 SOLUTION
1 (a) The expenditure of $2m to date is a sunk cost and should therefore be ignored. The
expected salvage value in 6 years is $1.2m compounded up for 6 years inflation to
Chapter 7
Risk Analysis, Real Options, and Capital
Budgeting
FINA 201 & 211
Michael Keefe
1
Topics
Motivating Example
Sensitivity Analysis
Scenario Analysis
Real Options and Decision Trees
2
MOTIVATIN
Stock Valuation
RWJ Chapter 9
FINA 201 & 211
Michael Keefe
1
Topics
Dividend Growth Model
Applies growing perpetuity to value a firm
Estimating g from accounting statements
Interpreting stock pric
Name:_
Student ID:_
TEST THREE
HCMC TRIMESTER 1 2014-2015
FINA 201
Corporate Finance
Time allowed: 50 Minutes
Instructions: Closed book
Write your name and student ID on each page.
Non-programmable ca
Name:_
Student ID:_
TEST THREE
HCMC TRIMESTER 1 2015-2016
FINA 201
Corporate Finance
Time allowed: 50i Minutes
Instructions:
Closed book
Write the information requested at the top of this page and wri
The Nature of Risk
Management
Alicia Garcia
What is it?
A potential gain or loss that occurs as a result
of an exchange rate change.
Should Firms Manage Risk?
They consider any use of risk management
Individual Learning Logs
Name: Zhong Heng
Student ID: 24839116
1. What concepts were covered in the
tutorial?
This week is talking about the two main
areas that are obscurity and rhetorical
devices. T
Individual Learning Logs
Name: Zhong Heng
Student ID: 24839116
1. What concepts were covered in the
tutorial?
This week tutorial is focuse on dealing
evidence. This topic shows the quality of
evidence
IndividualLearningLogs
Name: Zhong Heng
Student ID: 24839116
1. What concepts were covered in the
tutorial?
The structure of arguments
-Contentions
-Reasons
-Objections
Rebuttal opposed opinions
2.
16.3)
a)
The present values of the three alternatives are:
PV(liq) = 120
PV(A)=135/(1+rf)=135/(1+0%)=135
PV(B) = [(0.5 (161+0.569)]/(1+0%) = 115
Thus, project A has the highest present value.
b)
Yes,
12.2)
The cash flows from the project (in $ millions) have the following tree diagram:
1000 or 500
PVu
PV0
200 or 100
PVd
-500 or -250
The tree diagram for the risk neutral probabilities derived from
9.5 A woman who has just turned 24 wants to save for her retirement through a defined benefit
employee pension scheme. She plans to retire on her 60th birthday and wants a monthly
income, beginning th
9.5 A woman who has just turned 24 wants to save for her retirement through a defined benefit
employee pension scheme. She plans to retire on her 60th birthday and wants a monthly
income, beginning th
14.2)
Initially, the expected payoff to equity is: (0.5) (210 50) + (0.5) (80 50) = $95
Therefore, the price per share is: 95/100 =0.95
14.3)
a)
In the good state, both the new debt and the existing d