5. Valuing Callable Bonds KIC, Inc., plans to issue $5 million of bonds with a coupon
rate of 8 percent and 30 years to maturity. The current market interest rates on these
bonds are 7 percent. In one year, the interest rate on the bonds will be either 10
MARKET STRUCTURES
Managerial Economics - 2 Instructor: Fahlino Sjuib
A market system is any process enabling many buyers and sellers to buy and sell
goods and services. In general, markets are grouped in to four structures such as
monopoly, oligopoly, mon
Chapter 16
Problems 2, 6, 12, 16
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installed in E
1. The implications that can be drawn from the given graph are:
a. The actively managed funds have consistently outperformed the low fee index funds
over the past decade of January 1977 through December 1986.
b. Although the economic conditions over the d
BARRIERS TO ENTRY
Managerial Economics - 2 Instructor: Fahlino Sjuib
Barrierstoentry
Before a firm can compete in a market, it has to be able to enter it. Many markets have
at least some impediments that make it more difficult for a firm to enter a market
PRICE DISCRIMINATION
Managerial Economics - 2 Instructor: Fahlino Sjuib
Price discrimination is part of the commercial and business world. Movie theaters,
magazines, computer software companies, and thousands of other businesses have
discounted prices for
Chapter 17
Problems 1, 2, 3, 6, 10
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installed in
RISK AVERSION
Managerial Economics - 2 Instructor: Fahlino Sjuib
Risk aversion
Risk aversion is described as an investor who and when faced with two investments
with a similar expected return (but different risks), will prefer the one with the lower risk.
Chapter 20
Problems 6, 12
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installed in Excel.
T
Chapter 21
Problems 4, 7, 12
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installed in Excel
Binomial option pricing is based on a no-arbitrage assumption, and is a mathematically
simple but surprisingly powerful method to price options. Rather than relying on the
solution to stochastic differential equations (which is often complex to implement)
Kudler Strategy
Kudler Strategy
Your name
University
Class
Instructor
Date
1
Kudler Strategy
2
Introduction
Kudler Fine Foods is one of the gourmet food shops which built in 1998 and the owner is
Kathy Kudler. The company products include beverages and go
1. We can use the Black-Scholes equation to value the employee stock
options. We need to use the risk-free rate that is the same as the maturity as
the options. So, assuming expiration in three years, the value of the stock
options per share of stock is: