Problem 2
3. If the expected price next year will be $55, what is the stock price now that will not allow for arbitrage p
APT return = 3%-0.55*10%+1.2*8% = 7.1%
actual' regression return = 8% which is
Problem 5
Company HTA had a free cash flow for the firm (FCFF) of $1,500,000 last year.
It is expected the FCFF will keep a sustainable growth rate of 5%.
The company has 2 million common shares outst
Assignment 1
Instructions
Assignment 1 should be submitted after you have completed Unit 2. This assignment is worth
15 percent of your final grade.
Assignment 1 contains five problems. The maximum ma
Problem 3
Suppose that the index model for two Canadian stocks HD and ML is estimated with the following results:
RHD =0.02+0.80RM+eHD
R-squared =0.6
RML =-0.03+1.50RM+eML
R-squared =0.4
M =0.20
where
Problem 7
MicroSense, Inc., paid $2 dividends per share last year.
It is estimated that the companys ROEs will be 12% and 10%, respectively, next two years.
The plowback rate in next two years will be
Problem 4
You have been provided with the following information zero coupon bonds with $1000 face value.
Maturity- SemiAnnual Periods
1
2
3
4
5
6
7
8
Semi- Annual Spot
Rates
4.25
4.15
3.95
3.70
3.50
3
Problem 6
Company JUK has a ROE of 25% and the company will not pay any dividend for the next 3 years.
It is estimated that the company will pay $2 dividend per share after three years and then to lev
Problem 3 (15marks)
An investor sold seven contracts of June/2012 corn. The price per bushel was $1.64, and each contract was for 5000 bus
1. How much did the investor have to deposit on the investmen
Problem 2 (15 marks)
A stock currently sells for $50. In six months, it will either rise to $55 or decline to $45. The risk-free interest rate is 6% p
1. Find the value of a European call option with
Problem 8
An analyst uses the constant growth model to evaluate a company with the following data for a company:
Asset/ Equity
Total Asset Turnover Ratio
Current Ratio
Net Profit Margin Ratio
Dividend
Problem 2
You will be paying $10,000 a year in education expenses at the end of the next two years. Currently the yield curve is flat at
1. If you want to fully fund and immunize your obligation with
Problem 1
Three years ago, you purchased a bond for $974.69. The bond had three years to maturity, a coupon rate of 8% paid annua
Each year you reinvested all coupon interest at the prevailing reinves
Problem 1 (20marks)
The following information is given about options on the stock of a certain company:
S0 = $20, X =$20, r =5% (c.c.), T = 0.5 year, = 0.20
No dividends are expected. One option contr
Problem 3
A newly issued bond has the following characteristics:
Par value = $1000
Coupon rate = 8%
Yield to Maturity = 8%
Time to maturity = 15 years
Duration = 10 years
1. Calculate modified duratio
Assignment 2
Lesson 5: Assignment Problems
5.1
Assume you have $1 million now, and you have just retired from your job. You expect
to live for 20 years, and you want to have the same level of consumpt
Lesson 1: Assignment Problems
1.1
Households make four kinds of economic decisions (textbook, pp. 45).
Suppose you have two households with the same income. Household A has
one income earner and House
FNCE 370v8: Assignment 3
Assignment 3 is worth 5% of your final mark. Complete and submit Assignment 3 after you
complete Lesson 9.
There are 12 questions in this assignment. The break-down of marks f
FNCE 370v8: Assignment 3
Assignment 3 is worth 5% of your final mark. Complete and submit Assignment 3 after you
complete Lesson 9.
There are 12 questions in this assignment. The break-down of marks f
FNCE 370v8: Assignment 4
Assignment 4 is worth 5% of your final mark. Complete and submit Assignment 4 after you
complete Lesson 12.
There are 12 questions in this assignment. The break-down of marks
FNCE 370v8: Assignment 4
Assignment 4 is worth 5% of your final mark. Complete and submit Assignment 4 after you
complete Lesson 12.
There are 12 questions in this assignment. The break-down of marks
FNCE 370v8: Assignment 3
Assignment 3 is worth 5% of your final mark. Complete and submit Assignment 3 after you
complete Lesson 9.
There are 12 questions in this assignment. The break-down of marks f
FNCE 370v8: Assignment 3
Assignment 3 is worth 5% of your final mark. Complete and submit Assignment 3 after you
complete Lesson 9.
There are 12 questions in this assignment. The break-down of marks f
FNCE 370v8: Assignment 4
Assignment 4 is worth 5% of your final mark. Complete and submit Assignment 4 after you
complete Lesson 12.
There are 12 questions in this assignment. The break-down of marks
FNCE 370v8: Assignment 3
Assignment 3 is worth 5% of your final mark. Complete and submit Assignment 3 after you
complete Lesson 9.
There are 12 questions in this assignment. The break-down of marks f
FNCE 370v8: Assignment 5
Assignment 5 is worth 5% of your final mark. Complete and submit Assignment 5 after you
complete Lesson 15.
There are 12 questions in this assignment. The break-down of marks
FNCE 370v8: Assignment 4
Assignment 4 is worth 5% of your final mark. Complete and submit Assignment 4 after you
complete Lesson 12.
There are 12 questions in this assignment. The break-down of marks
FNCE 370v8: Assignment 3
Assignment 3 is worth 5% of your final mark. Complete and submit Assignment 3 after you
complete Lesson 9.
There are 12 questions in this assignment. The break-down of marks f