FINA4050
Mergers & Acquisitions
Dr. Stan Ho
Department of Finance, CUHK
September 9, 2017
Course Outline
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Class 1 (Sep 9): M&A Introduction
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Class 2 (Sep 16): M&A History & Motivations
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Class 3 (Sep 23): M&A Process
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Class 4 (Sep 30): M&A Process
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Cl
CHAPTER 17
The Greek Letters
Practice Questions
Problem 17.8.
What does it mean to assert that the theta of an option position is 0.1 when time is measured
in years? If a trader feels that neither a stock price nor its implied volatility will change, what
CHAPTER 17
The Greek Letters
Practice Questions
Problem 17.8.
What does it mean to assert that the theta of an option position is 0.1 when time is measured
in years? If a trader feels that neither a stock price nor its implied volatility will change,
what
CHAPTER 13
Valuing Stock Options: The Black-Scholes-Merton Model
Practice
Questions
Problem 13.8.
A stock price is currently $40. Assume that the expected return from the stock is 15% and its
volatility is 25%. What is the probability distribution for the
CHAPTER 12
Introduction to Binomial Trees
Practice Questions
Problem 12.8.
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 posi
CHAPTER 11
Trading Strategies Involving Options
Practice Questions
Problem 11.8.
Use putcall parity to relate the initial investment for a bull spread created using calls to the
initial investment for a bull spread created using puts.
A bull spread using
CHAPTER 9
Mechanics of Options Markets
Practice Questions
Problem 9.8.
A corporate treasurer is designing a hedging program involving foreign currency options.
What are the pros and cons of using (a) the NASDAQ OMX and (b) the over-the-counter
market for
CHAPTER 7
Swaps
Practice
Questions
Problem 7.8.
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
CHAPTER 6
Interest Rate Futures
Practice Questions
Problem 6.8.
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
CHAPTER 10
Properties of Stock Options
Practice Questions
Problem 10.8.
Explain why the arguments leading to putcall parity for European options cannot be used to
give a similar result for American options.
When early exercise is not possible, we can argu
Semester I 2017/18
THE CHINESE UNIVERSITY OF HONG KONG
FINA 3210B Risk Management and Insurance
Thursday 9:30 12:15 (ELB 401)
Instructor:
Professor Wai-Sum Chan (Email: [email protected])
Tutor: Miss Iris Au (Email: [email protected])
Course Website
Chaper 79
Example 79 illustrates that when the
yield rate is unchanged after a bond
investment until it is sold prior to
maturity, the holding-period yield in that
period is equal to the yield to maturity.
However, when the prevailing yield rate
fluctuat
Chapter 74
(a) We need to solve for i in the basic
price formula P = (F r)a nei + Cvn ,
which, on the issue date, is 105.25 =
2a20ei + 100(1 + i) 20 . The numerical
solution of i is 1.69% (per half-year).
Thus, the yield to maturity is 3.38% per
annum con
Chapter 72
Yield to Maturity Given the yield rate
applicable under the prevailing market
conditions, we can compute the bond
price using one of the pricing formulas in
Chapter 6. In practice, however, the
yield rate or the term structure are not
observabl
Chapter 78
Holding-Period Yield For various
reasons, investors often sell their bonds
before maturity. The holding-period
yield, also called the realized compound
yield or the total return, is often
computed on an ex post basis to
evaluate the average ret
Chapter 75
Although the Excel Solver can be used to
calculate the solution of equations (7.1)
and (7.2), the computation can be more
easily done using the Excel function
YIELD, the specification of which is given
as follows: Excel function:
YIELD(smt,mty,
Chapter 77
Table 77 illustrates the par yields
computed from two different spot-rate
curves: an upward sloping curve and a
downward sloping curve. Table 7.2: Par
yields of two term structures Case 1
Case 2 n iS n iP i S n iP 1 3.50 3.50 6.00
6.00 2 3.80 3
Learning Objectives 1. Yield to maturity,
yield to call and par yield 2. Realized
compound yield and horizon analysis 3.
Estimation of the yield curve: bootstrap
method
7.1 Some Simple Measures of Bond Yield
Current yield is the annual dollar
amount of c
Chapter 73
A $1,000 par value 10-year bond with
redemption value of $1,080 and coupon
rate of 8% payable semiannually is
purchased by an investor at the price of
$980. Find the yield to maturity of the
bond. Solution: The cash flows of the
bond in this ex
Chapter 76
Given the prevailing spot-rate curve and
that bonds are priced according to the
existing term structure, the yield to
maturity iY is solved from the following
equation (for an annual coupon bond): F
rX n j=1 1 (1 + iY ) j + C (1 + iY ) n = F rX
FINA 3010 A/B/C (2017 Fall)
Assignment 1
Available online from Sep. 21st, 2017
Due at:
Section A: 9:30AM, Sep. 28th, 2017
Section B: 9:30AM, Sep. 27th, 2017
Section C: 2:30PM, Sep. 28st, 2017
You are encouraged to do this assign
International Joint Venture. Anheuser-Busch, (which is now part of AB InBev due to a merger), the
producer of Budweiser and other beers, has engaged in a joint venture with Kirin Brewery, the
largest brewery in Japan. The joint venture enables Anheuser-Bu
The Chinese University of Hong Kong
1st Term 2017-2018
FINA 3020A/B
International Finance
Instructor:
Office:
Tel.:
Fax:
Email:
Dr. Haynes Yung
Room 1243, 12 Chak Cheung Street
3943-7826
2603-6586
[email protected] (please email me for individual appoint