When is a forward contract preferred over an option contract ?

Q: Complete the first two months for a mortgage of $ 450 000 for 15 years at a constant rate of 4.5 %

A: A mortgage is a loan on a property in which the property itself is held as collateral.

Q: 1. In equity financing, the corporation is required to distribute dividends to its stockholders on a…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: 9. A company that sells high-purity laboratory chemicals is considering investing in new equipment…

A: An annuity refers to regular cash flows made at equal intervals and of the same amounts. The future…

Q: If debt and equity can be modeled as options on the firm’s assets, then the firm's shareholders have…

A: If debt and equity can be modeled as options on the firm’s assets, then the firm's shareholders have…

Q: Michael Sanchez purchased a condominium for $94,000. He made a 20% down payment and financed the…

A: A mortgage is a loan on a property where the property itself is used as collateral.

Q: If total debt and total asset are RM3,050,000 and RM3,460,000 respectively, calculate Debt-to-assets…

A: Long-term Solvency: Long-term solvency shows the strength and the ability of the company to pay its…

Q: Discuss at least 3 implications of Ratio Analysis and indicate 2 examples for each limitation.

A: Ratio analysis is a mathematical tool for determining a company's liquidity, operational efficiency,…

Q: Desribe the international versions of bonds in brief. Focus clearly on the differences between them…

A: International bond A non-domestic entity issues an international bond in a country. In most cases,…

Q: Sunblessed Juice Company sells bags of oranges and cartons of orange juice. Sunblessed grades…

A: Profit maximization is the primary goal of any business, and it is also a financial management goal.…

Q: Given the following data, what should the price of the stock be? Required return: 10% Present…

A: Where,P0 = Stock value D0 = Current dividend g = growth rate in decimal format  D0 ( 1 + g)…

Q: A 15-year annual coupon bond trades for $1,200 in the market. If the market interest rate is 4%,…

A: A Bond refers to an instrument that represents the loan being made by the investor to the company…

Q: You are trying to pick the least-expensive equipment for your manufacturing operations. You have two…

A: Cost of capital = 10% Year Hi-Quality CFs Lo-Quality CFs 0  $   -40,000.00  $   -20,000.00 1…

Q: A debt of P40,000, whose interest rate is 15% compounded semiannually, is to be discharged by a…

A: Given,  The debt amount is P40,000 Interest rate 15%

Q: Directions: Match the terms in Column A with the correct definition in Column B. You may choose more…

A: Investment is sacrifice of present worth of money in order to gain return in future.

Q: Acme Bricks, a masonry products company, wants to have $600000 on hand bef invests in new conveyors,…

A: As the money is deposited in the account and the money grow with time according to the interest rate…

Q: Q1. You plan to contrībute Ł6,000 at the end of every three months (that is, at each quarter-end) in…

A: In order to know the time period required to reach a certain financial goal of an individual or…

Q: You started with a market price of $30 and 10,000 shares. Calculate number of shares after the split…

A: Market Price = $30 A number of shares = 10,000 shares a. 2 for 7 split b. 3 for 2 split c. 2 for 5…

Q: investment costs $21,259 and will generate cash flow of $7,000 annually for four years. The firm’s…

A: a) IRR:  IRR is the measure of Profitability of the project.  if IRR > Cost of capital, project…

Q: The risk-free rate is 2.5%. And the AAP Corporation currently trades at $200. Ignore transaction…

A: Given,  The risk free rate is 2.5% Spot price is $200 Strike price is $220

Q: The risk-free rate of interest is 2.1% and the market return is 9%. Howard Corporation has a beta of…

A: Risk free rate (Rf) = 0.021 Market return (Rm) = 0.09 Beta (b) = 1.75 Required return = ?

Q: 360 days To complete the sale of a house, the you accept a 240-day note for $9,000 at 7% simple…

A: Note for 240 days  Value of Note = $9,000 Interest rate = 7% Third party note = $9,108 Time period…

Q: What is the present value of a perpetual stream of cash flows that pays ​$3,500 at the end of year…

A: Cash flow =$3500 Annual growth rate is 4% To Find:- Present value of a growing​ perpetuity if…

Q: (b) According to the new renumeration scheme, the starting pay of a technician is RM2029 per month…

A: Given, Meaning of Remuneration:- It's the compensation which an employee gets. It is the base salary…

Q: Valerie refinanced her home loan. The new loan of $103,000.00 has an interest rate of 5.9%…

A: Here, Loan amount = $103,000.00 Interest rate = 5.9% compounded monthly Term of loan = 21 years To…

Q: You own a coal mining company and are considering opening a new mine. The mine will cost $115.9…

A: Given Cost of project is $115.9 million Cashflows $20.1 million Cost of capital is 8.2%

Q: Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor…

A: Net Present Value: It is applied to series of cash flows happening at various times and represent…

Q: A newly established company is considering purchasing a lot in the province. The company needs 10M…

A: Here, To Find: Part a. Amount of periodic payment from each option =? Part b. Option that offers…

Q: Suppose that TipsNToes, Inc.'s capital structure features 55 percent common equity, 45 percent debt…

A: Weight of common equity = 0.55 Weight of debt = 0.45 Cost of equity = 0.14 Before tax cost of debt =…

Q: A company has cost estimates associated with operating and maintaining the currently owned filter…

A: Given, In this question we have to determine the cost of retention and the annual worth of the…

Q: Consider the investment project with net cash flows shown. There are 2 rates of return for the…

A: The internal rate of return is a method of finding the profitability of a project. If the sign of…

Q: A borrower takes out a 30-year loan for a house worth $250,000. If the annual interest rate is 6%.…

A: Current value of loan (PV) = $250,000 Interest rate (r) = 6% Period for future value (t) = 12 Years…

Q: Should market or book value be used for debt and equity?

A: Book value for debt and equity represents the recorded value of the debt and equity in the company's…

Q: What is the difference between the time periods being measured with real income and exchange rates?

A: When referring to an individual's income, real income is the amount of money earned after inflation…

Q: What can you say about the market value of the company? is it positve or is negative?

A: In finance market value of a company is the worth of the company and the worth of the company is…

Q: Changing compounding frequency: Bank Astra offers deposits compounded  annually, semi-annually, and…

A: Effective Annual Interest Rate refers to the concept which dictates the actual rate of interest…

Q: The following table lists the options on Amazon shares in January 2018 when Amazon stock was selling…

A: Concept. 1. Call option is exercised when strike price is less than future spot price. 2. Put option…

Q: Coolbrook company has the following information available for the past year: (Chart in photo below)…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: IRR, investment life, and cash inflows Oak Enterprises accepts projects earning more than the firm's…

A: Initial investment is $96,200 Annual cash flow are $15000 Cost of Capital is 13% To Find:- IRR of…

Q: The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $40,000. It had…

A: Net present value is the difference between the present value of cash inflows and present value of…

Q: How can you use mean variance optimization to determine how much should be invested in illiquid…

A: Mean variance Analysis The process in which the risk expressed as variance is weighted against the…

Q: True or False 1. The holder of the bond indenture is receiving interest income on a regular basis.…

A: Equity financing is the process of raising money from the investors and give ownership to the equity…

Q: result of winning the Gates Energy Innovation​ Award, you are awarded a growing perpetuity. The…

A: Present value of the growing perpetuity = Cash Flows / ( Discount Rate - Growth Rate

Q: 1. The table below provides show the share price and dividends received: Share price ($) Dividend…

A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: You notice in the WSJ a bond that is currently selling in the market for ​$1,053 with a coupon of9​%…

A: Market price of bond = $1,053 Coupon rate = 9% Par value = $1000 Annual coupon amount = Par…

Q: Related to Checkpoint​ 5.3) ​(Compound interest with​ non-annual periods)  Calculate the amount of…

A: Note : As per Bartleby guidelines,If a question with multiple sub-parts are posted,  first 3…

Q: Inventory Analysis QT, Inc. and Elppa Computers, Inc. compete with each other in the personal…

A: Inventory turnover = Cost of goods sold/Average inventory =[ Cost of goods sold/(Beginning inventory…

Q: You own a 5-year bond that has a face value of $1000 and pays 10% interest each year. Two years…

A: Face value (FV) = $1000 Coupon rate = 10% Annual coupon amount (C) = Face value*Coupon rate =…

Q: Your firm has taken on cost saving measures that will provide a benefit of $11,000 in the first…

A: First year benefits (C) = $11,000 Annual growth rate (g) = - 0.03 (-3%) Interest rate (r) = 0.09…

Q: 5. The payments made in a sinking fund are $5, 000 at the end of each quarter for 3 years. Assume…

A: Annual interest rate = 10% (or 0.10) Quarterly interest rate = 2.5% (or 0.025 i.e. 0.10 / 4) Amount…

Q: O Payback does not consider the time value of money

A: Capital projects refer to a project which is helpful in maintaining and improving the asset of the…

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.