Vinu Sebastian
FIN 401 SEC 004
EXAM 1 FORMULA SHEET
Liquidity Ratios
Current ratio = current assets/current liabilities
Quick ratio = (current assets inventory)/current liabilities
Cash ratio = cash / current liabilities
NWC to total assets =NWC/TA
Debt v
CHAPTER 10
Properties of Stock Options
Problem 1.
What is a lower bound for the price of a six-month call option on a non-dividend-paying
stock when the stock price is $80, the strike price is $75, and the risk-free interest rate is 10%
per annum?
The low
CHAPTER 5
Determination of Forward and Futures Prices
Problem 1.
Is the futures price of a stock index greater than or less than the expected future value of the
index? Explain your answer.
The futures price of a stock index is always less than the expect
CHAPTER 9
Mechanics of Options Markets
Problem 1.
Suppose that a European call option to buy a share for $100.00 costs $5.00 and is held until
maturity. Under what circumstances will the holder of the option make a profit? Under what
circumstances will th
CHAPTER 2
Mechanics of Futures Markets
Problem 1.
What are the most important aspects of the design of a new futures contract?
The most important aspects of the design of a new futures contract are the specification of the
underlying asset, the size of th
CHAPTER 6
Interest Rate Futures
Problem 1.
The price of a 90-day Treasury bill is quoted as 10.00. What continuously compounded
return (on an actual/365 basis) does an investor earn on the Treasury bill for the 90-day
period?
The cash price of the Treasur
CHAPTER 7
Swaps
Problem 1.
Explain why a bank is subject to credit risk when it enters into two offsetting swap contracts.
At the start of the swap, both contracts have a value of approximately zero. As time passes, it
is likely that the swap values will
CHAPTER 3
Hedging Strategies Using Futures
Problem 1.
In the Chicago Board of Trades corn futures contract, the following delivery months are
available: March, May, July, September, and December. State the contract that should be
used for hedging when the
CHAPTER 12
Introduction to Binomial Trees
Problem 1.
Consider the situation in which stock price movements during the life of a European option
are governed by a two-step binomial tree. Explain why it is not possible to set up a position
in the stock and
CHAPTER 13
Valuing Stock Options: The Black-Scholes-Merton Model
Problem 1.
A portfolio manager announces that the average of the returns realized in each of the last 10
years is 20% per annum. In what respect is this statement misleading?
This problem re
CHAPTER 11
Trading Strategies Involving Options
Problem 1.
Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7,
respectively. How can the options be used to create (a) a bull spread and (b) a bear spread?
Construct a table th
Homework Chapter 6
(Due Date: 11:59 PM, February 25, 2016)
Note: You are required to submit this homework via Canvas on due date. While you can discuss
homework questions with your group members, you will have to finish all homework questions
indecently.
Homework Chapter 13
(Due Date: 11:59 PM, April 21, 2016)
1. You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected
return of 14% and Stock Y with an expected return of 10.5%. If your goal is to create a
portfolio with a
Homework Chapter 7
(Due Date: 11:59 PM, March 17, 2016)
Note: You are required to submit this homework via Canvas on due date. While you can discuss
homework questions with your group members, you will have to finish all homework questions
independently.
The U.S. presidential election has given a boost to much of the stock market. But for some companies, its sent them
into the stratosphere.
The firms, ranging from steel-makers to banks to retailers, have been surging in anticipation of Donald Trumps
presi
The Trouble Assets Relief Program (TARP) played a critical role in mitigating the
financial crisis that following the 2008 recession. TARP was particularly helpful to
financial institutions, effectively serving as a lifeline. The primal relief TARP extend
FIN 401
Quiz 1 Name
Fall-20%
: I [3
"(3
Each 'question is worth 3 points. Show all of your work including a number line and key
strokes to receive full credit.
1. Fresh out of college you are negotiating with you prospective new employer. They
offer you a
FIN 401
Case II
30 Points
This case is designed to increase your understanding of Chapter 7, Bond Pricing. You will perform this
analysis with the same group from Case I.
All bond calculations may be done in excel or with your financial calculator. Either
S & S Air, Inc. 2004 Balance Sheet
Assets
Current Assets
Cash
$
234,000
Accounts Recievable
421,000
Inventory
472,000
Total Current Assets
S & S Air, Inc. 2004 Income Statement
Liabilities & Equity
$
Current liabilities
Accounts Payable
$
Notes Payable
49
Memo
To:
Mark Sexton & Todd Story, S & S Air, Inc.
From:
Olivia Booth & Cameron
Date:
11/2/2016
Re:
Analysis of existing cost system and desirability of switching to ABC.
Message
For the current and cash ratios, S&S is below the median industry ratios, bu
Memo
Date: 11/2/2016
To:
From:
Re:
Mark Sexton & Todd Story, S & S Air, Inc.
Olivia Booth & Cameron
S&S Ratio Analysis
Message
Thank you for allowing us the opportunity to work with your company. As requested, we have
analyized your companys current ratio
FIN 401/FIN 402- notes for Term Structure of Interest Rates-Yield
Curve
Chapter 7
1. NR- nominal interest rates are money or stated rates. Can change quickly as
inflationary expectations change.
2. RR-real interest rates are the base or beginning of all i
Target Substainability
Target Corp. has a very detailed Substainability program that they have in place within
their organization. One of which they promote extensively on their webpage and within their
stores. Target has four main areas in which they foc
(Read the full article below or view the same article online which may require subscription)
A Portfolio That's as Simple as One, Two, Three
With so many funds to choose from, investors might get
everything they need by buying just a few of them
By ANNA P
6th Edition
Chapter 02 Determination of Interest Rates
Chapter Two
Determinants of Interest Rates
I. Chapter in Perspective
This is the first of several chapters that familiarize students with the determinants of
valuation of bonds and related securities.
6th Edition
Chapter 01 Introduction
Part I
Introduction and Overview of Financial Markets
Chapter One
Introduction
I. Chapter in Perspective
This chapter has three major sections and one minor section. The text provides a general
overview of the major typ
Chapter 12 - Commercial Banks Financial Statements and Analysis
6th Edition
Chapter Twelve
Commercial Banks Financial Statements and
Analysis
I. Chapter in Perspective
This is the second of three chapters that cover commercial banks. This chapter develops
6th Edition
Chapter 08 - Stock Markets
Chapter Eight
Stock Markets
I. Chapter in Perspective
In this chapter the readers are introduced to the major characteristics of stock securities
and their primary and secondary markets. Fully underwritten offers and