Discount rate
NPV
IRR
8%
#MACRO?
#MACRO?
Year
0
1
2
3
4
5
6
7
8
9
10
Cash flow
-600
100
100
100
100
100
100
100
100
100
100
2. You just took a $10,000, five-year loan. Payments at the end of each
year
ANSWERS FOR TUTORIAL:
DETERMINATION of FORWARD and FUTURE PRICE
Problems:
1. (a) 10% per annum.
(b) R = 9.76% per annum.
(c) R = 9.57% per annum.
(d) R = 9.53% per annum.
2. R = 14.91% per annum.
3. T
TUTORIAL:
DETERMINATION of FORWARD and FUTURE PRICE
1. An investor receives $1,100 in one year in return for an investment of $1,000 now. Calculate the
percentage return per annum with
a. Annual compo
TUTORIAL 2: MECHANICS OF FUTURES AND FORWARDS MARKETS
1. Answer the following questions to understand the mechanics of future trading:
A. Suppose you call your broker and issue instructions to sell on
TUTORIAL 2: MECHANICS OF FUTURES AND FORWARDS MARKETS
Problems:
1. An investor enters into two long July futures contracts on frozen orange juice. Each
contract is for delivery of 15,000 pounds. The c
TUTORIAL 1: NATURE OF FORWARDS, FUTURES AND OPTIONS CONTRACTS
1. A cattle farmer expects to have 120,000 pounds of live cattle to sell in three months. The livecattle futures contract on the Chicago M
Dear students,
15% QUIZ#1 is scheduled on September 18, 2012, Tuesday
It will cover lectures 1, 2 and 3 (find relevant chapters in the book)
Solve: tutorials 1, 2 and 3.
You can prepare one page (A4)
DeterminationofForward
andFuturesPrices
Chapters 4.1, 4.2 and Chapter 5
1
AGENDA:
Short selling strategy;
Measuring interest rates;
Determination of forward price for assets:
that do not have an inter
MechanicsofFutures
Markets
Chapter 2
Agenda:
1.
2.
3.
4.
Features of futures contracts;
Margins requirements;
Delivery and types of orders;
Futures vs. Forwards
FuturesContracts
A futures contract is
Introduction to
Financial Derivatives
Chapter 1
AGENDA:
Derivatives and ways they are used;
Types of derivatives contracts:
1.
2.
1.
Futures
Forwards
Options
Simple examples of hedging, speculation an
BS CORPOPATION
1.BS Corp. has a stock price P0 = 40. The firm has just paid a dividend
of $2,1 per share, and knowledgable
shareholders think that this dividend will grow by a rate of 7% per year.
Use