FIN134, Spring 2014
Dr. Lan Liu
Homework 3 Part 2 (Chapter 25)
b
1.
a.
b.
c.
d.
e.
A derivative is a financial instrument whose value is determined by:
regulatory body such as the FTC.
a primitive or underlying asset.
hedging a risk.
hedging a speculation
FIN134, Spring 2014
Dr. Lan Liu
Homework 3 Part 1 (Chapter 22 & 23)
c
1.
a.
b.
c.
d.
e.
a
2.
e
3.
You can realize the same value as that derived from stock ownership if you:
sell a put option and invest at the risk-free rate of return.
buy a call option a
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The Dybvig Corporations common stock has a beta of 1.21. If the risk-free rate is 3.5 percent and the
expected return on the market is 11 percent, what is
Financial Distress
Suggested Reading: Chapter 30
30-0
Key Concepts and Skills
Be able to define financial distress and understand what
happens to a firm in distress
Understand the difference between liquidation and
reorganization
Understand the absolute
FIN 134, Spring 2015
Dr. Lan Liu
College of Business Administration
California State University, Sacramento
FIN134 Financial Management
Section 1 TAH1026 12:00-1:15pm
Section 2 TAH1003 1:30-2:45pm
Spring 2015
Instructor:
Office:
Email:
Office Hours:
Lan L
FIN134, Spring 2015
Dr. Lan Liu
Homework 3 Part 1 (Chapter 22 & 23)
c
1.
a.
b.
c.
d.
e.
a
2.
e
3.
Jillian owns an option which gives her the right to purchase shares of WAN stock at a
price of $20 a share. Currently, WAN stock is selling for $24.50. Jilli
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You are long 10 gold futures contracts, established at an initial settle price of $1,550 per ounce, where
each contract represents 100 ounces. Over the sub
Financial Instruments
- Options
Suggested Reading: Chapter 22
Key Concepts and Skills
Understand option terminology
Be able to determine option payoffs and profits
Understand the major determinants of option prices
Understand and apply put-call parity
Financial Instruments
- Options: Extensions and Applications
Suggested Reading: Chapter 23
23-0
Key Concepts and Skills
Understand executive stock options
Understand how the option to expand increases the value
of a start-up
Be able to apply the binomi
FIN134, Spring 2015
Dr. Lan Liu
Homework 3 Part 2 (Chapter 25)
b
1.
a.
b.
c.
d.
e.
A derivative is a financial instrument whose value is determined by:
regulatory body such as the FTC.
a primitive or underlying asset.
hedging a risk.
hedging a speculation