Final Quiz Fall 2013
Answer each of the following questions.
1. One year ago, a U.S. investor converted dollars to Euros and purchased 100 shares of stock in a French company at a price of €50 per share. The stock’s total purchase cost was €5,000. At the time of purchase, in the currency market $1.3/€. Today, the stock is selling at a price of €55 per share, and in the currency market $1.25/€. The stock does not pay a dividend. If the investor were to sell the stock today and convert the proceeds back to dollars, what would be his realized return on his initial dollar investment from holding the stock? (15)
2. Answer the following questions (15)
a) A 2-month call option on Apple’s stock has a strike price of $575 and sells in the market for $19.25. Apple’s current stock price is $580. What is the option premium?
b) A 2-month put option on Apple’s stock has a strike price of $590 and sells in the market for $34.50. What is the exercise value of the option?
c) A 6-month call option on Romer Technologies’ stock has a strike price of $45 and sells in the market for $8.25. Romer’s current stock price is $48. What is the exercise value of the option and the option premium?
3. . Toni Jamison is responsible for forecasting Downhill’s cash requirements for the next three months of the year. Her sales forecasts and cost estimates in the thousands are the following:
Dec Jan Feb
Sales 160 40 60
Purchases 40 40 40
Rent 2 2 2
Salaries 4.8 4.8 4.8
Depreciation 7 7 7
Sales are made only on a cash basis and purchases must be paid during the following month. Purchases in November were $140,000. Ms. Jamison expects to have no cash at the beginning of December, but wants to sustain a target balance of $6,000 in the future. (15)
a. Construct a cash budget for the three months including any surplus or shortage.
b. What can the firm do with a cash surplus?
4. Over the next 4 years, the FCFs (in millions) for a company are estimated as -$10, -$5, $15, $25. After that FCFs will grow at a constant rate of 5%. If the WACC is 10% estimate the fair price of the stock? The company has $50M in debt and $15M in preferred stock with 10M in shares outstanding. (20)
5. Given the following information on trade credit and a bank loan, tell me whether the company ought to borrow from the bank and take the discount or not. (15)
Bank loan terms: add-on interest loan of 8%
6. Given the following information, answer the questions below: (20)
Risk free rate: 2%
Market rate: 12%
Stock Expected Return Beta
IBM 8% 0.7
GE 12 1.4
GOOG 16 1.25
AAPL 25 0.9
Why Choose Us
We value our clients. For this reason, we ensure that each paper is written carefully as per the instructions provided by the client. Our editing team also checks all the papers to ensure that they have been completed as per the expectations.
Professional Academic Writers
Over the years, MyEssay.Help has managed to secure the most qualified, reliable and experienced team of writers. The company has also ensured continued training and development of the team members to ensure that it keep up with the rising Academic Trends.
Our prices are fairly priced in such a way that ensures affordability. Additionally, you can get a free price quotation by clicking on the "Place Order" button.
We pay strict attention on deadlines. For this reason, we ensure that all papers are submitted earlier, even before the deadline indicated by the customer. For this reason, the client can go through the work and review everything.
At MyEssay.help, all papers are plagiarism-free as they are written from scratch. We have taken strict measures to ensure that there is no similarity on all papers and that citations are included as per the standards set.
Customer Support 24/7
Our support team is readily available to provide any guidance/help on our platform at any time of the day/night. Feel free to contact us via the Chat window or support email: firstname.lastname@example.org.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
MyEssay.help has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.
At MyEssay.help, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.
Admission and Business Papers
Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.
Editing and Proofreading
Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.
We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.