This document contains 25 multiple choice questions about valuing options from Chapter 21 of Principles of Corporate Finance by Brealey, Myers, and Allen. The questions cover key concepts related to option pricing including the Black-Scholes model, binomial option pricing model, option Greeks such as delta, and replicating portfolios. Sample calculations are provided for many of the questions.
This document contains solutions to sample exam questions for an MFE/3F exam. The first question involves using put-call parity to calculate the risk-free interest rate given call and put option prices on a stock. The solution is 0.039. The second question involves analyzing if given call and put option prices allow for arbitrage opportunities; both Mary and Peter's proposed portfolios are correct. The third question calculates the fee amount y% an insurance company should charge on a stock-linked deferred annuity to break even. The solution is 13.202%. The fourth question values an American call option on a stock using a two-period binomial model; the value is 2. The fifth question values a dollar-denomin
Colleen P Cahill Econometrics Work Examplecolleenpcahill
This document estimates several linear probability models to predict the outcome of US presidential elections from 1972 to 1992. It finds that only the coefficient on the incumbent party's candidate's vote share is statistically significant. When predicting the 1996 election, the model correctly predicts that Clinton would win. Testing finds no evidence of serial correlation in the errors. Using robust standard errors does not substantially change the significance of any variables.
cost of capital .....ch ...of financial management ..solution by MIAN MOHSIN ...mianmohsinmumtazshb
The document provides solutions to problems from Chapter 11 on the cost of capital.
It calculates the cost of various sources of capital such as debt, preferred stock, and common equity. It also calculates the weighted average cost of capital (WACC) using different capital structure weights.
Key calculations include:
1) Calculating the cost of debt using the yield to maturity method and the approximation method.
2) Calculating the cost of preferred stock as the dividend yield.
3) Calculating the cost of common equity using the capital asset pricing model.
4) Calculating the WACC using both book value and market value weights for the capital structure.
5) Exploring how
This document discusses the concept of cost of capital and how to measure it. It defines cost of capital as the minimum rate of return a company must earn on invested funds to prevent a decrease in shareholder value. The document then discusses how to calculate the cost of various components of capital structure including:
- Preference share capital
- Debt capital
- Equity share capital
- Retained earnings
It provides formulas and examples for calculating the cost of each component based on factors like dividend/interest rates, issue price, tax rates, redemption value, and growth rates. The weighted average cost of capital is also introduced as a way to incorporate different costs of all components of a firm's capital structure.
This document discusses strategically equivalent contests in game theory. It introduces proportional contests, where players compete for a share of a prize based on their effort levels, and lottery contests, where players' efforts determine their probability of winning the entire prize. For risk-neutral players, proportional and lottery contests are strategically equivalent. The document derives differential equations whose solutions represent the Nash equilibrium effort levels for risk-averse players in proportional and lottery contests. It aims to determine the conditions under which both contest types are strategically equivalent for risk-averse players.
What is the Expectation Maximization (EM) Algorithm?Kazuki Yoshida
Review of Do and Batzoglou. "What is the expectation maximization algorith?" Nat. Biotechnol. 2008;26:897. Also covers the Data Augmentation and Stan implementation. Resources at https://github.com/kaz-yos/em_da_repo
MANAJEMEN KEUANGAN tugas mahasiswa akuntansi FAKULTAS EKONOMI DAN BISNIS fanjistie
The document discusses the role of return analysis and risk in investment. It provides formulas to calculate expected return, actual return, variance, standard deviation and coefficient of variation to measure risk. It also discusses portfolio risk reduction through diversification and the concept of Value at Risk to estimate maximum potential portfolio losses. The document presents examples and explanations of calculations related to return, risk and risk management of individual securities and portfolios.
This document contains solutions to sample exam questions for an MFE/3F exam. The first question involves using put-call parity to calculate the risk-free interest rate given call and put option prices on a stock. The solution is 0.039. The second question involves analyzing if given call and put option prices allow for arbitrage opportunities; both Mary and Peter's proposed portfolios are correct. The third question calculates the fee amount y% an insurance company should charge on a stock-linked deferred annuity to break even. The solution is 13.202%. The fourth question values an American call option on a stock using a two-period binomial model; the value is 2. The fifth question values a dollar-denomin
Colleen P Cahill Econometrics Work Examplecolleenpcahill
This document estimates several linear probability models to predict the outcome of US presidential elections from 1972 to 1992. It finds that only the coefficient on the incumbent party's candidate's vote share is statistically significant. When predicting the 1996 election, the model correctly predicts that Clinton would win. Testing finds no evidence of serial correlation in the errors. Using robust standard errors does not substantially change the significance of any variables.
cost of capital .....ch ...of financial management ..solution by MIAN MOHSIN ...mianmohsinmumtazshb
The document provides solutions to problems from Chapter 11 on the cost of capital.
It calculates the cost of various sources of capital such as debt, preferred stock, and common equity. It also calculates the weighted average cost of capital (WACC) using different capital structure weights.
Key calculations include:
1) Calculating the cost of debt using the yield to maturity method and the approximation method.
2) Calculating the cost of preferred stock as the dividend yield.
3) Calculating the cost of common equity using the capital asset pricing model.
4) Calculating the WACC using both book value and market value weights for the capital structure.
5) Exploring how
This document discusses the concept of cost of capital and how to measure it. It defines cost of capital as the minimum rate of return a company must earn on invested funds to prevent a decrease in shareholder value. The document then discusses how to calculate the cost of various components of capital structure including:
- Preference share capital
- Debt capital
- Equity share capital
- Retained earnings
It provides formulas and examples for calculating the cost of each component based on factors like dividend/interest rates, issue price, tax rates, redemption value, and growth rates. The weighted average cost of capital is also introduced as a way to incorporate different costs of all components of a firm's capital structure.
This document discusses strategically equivalent contests in game theory. It introduces proportional contests, where players compete for a share of a prize based on their effort levels, and lottery contests, where players' efforts determine their probability of winning the entire prize. For risk-neutral players, proportional and lottery contests are strategically equivalent. The document derives differential equations whose solutions represent the Nash equilibrium effort levels for risk-averse players in proportional and lottery contests. It aims to determine the conditions under which both contest types are strategically equivalent for risk-averse players.
What is the Expectation Maximization (EM) Algorithm?Kazuki Yoshida
Review of Do and Batzoglou. "What is the expectation maximization algorith?" Nat. Biotechnol. 2008;26:897. Also covers the Data Augmentation and Stan implementation. Resources at https://github.com/kaz-yos/em_da_repo
MANAJEMEN KEUANGAN tugas mahasiswa akuntansi FAKULTAS EKONOMI DAN BISNIS fanjistie
The document discusses the role of return analysis and risk in investment. It provides formulas to calculate expected return, actual return, variance, standard deviation and coefficient of variation to measure risk. It also discusses portfolio risk reduction through diversification and the concept of Value at Risk to estimate maximum potential portfolio losses. The document presents examples and explanations of calculations related to return, risk and risk management of individual securities and portfolios.
Leveraged and inverse ETFs seek a daily return equal to a multiple of an index' return, an objective that requires continuous portfolio rebalancing. The resulting trading costs create a tradeoff between tracking error, which controls the short-term correlation with the index, and excess return (or tracking difference) -- the long-term deviation from the levered index' performance. With proportional trading costs, the optimal replication policy is robust to the index' dynamics. A summary of a fund's performance is the \emph{implied spread}, equal to the product of tracking error and excess return, rescaled for leverage and average volatility. The implies spread is insensitive to the benchmark's risk premium, and offers a tool to compare the performance of funds on the same benchmark, but with different multiples and tracking errors.
This slide is for my presentation of a lecture series on risk and return. To watch the video of the lecture series, click this link to my YouTube channel
https://www.youtube.com/channel/UCDf-7a9UoewaGcnTtUJgtwA
FellowBuddy.com is an innovative platform that brings students together to share notes, exam papers, study guides, project reports and presentation for upcoming exams.
We connect Students who have an understanding of course material with Students who need help.
Benefits:-
# Students can catch up on notes they missed because of an absence.
# Underachievers can find peer developed notes that break down lecture and study material in a way that they can understand
# Students can earn better grades, save time and study effectively
Our Vision & Mission – Simplifying Students Life
Our Belief – “The great breakthrough in your life comes when you realize it, that you can learn anything you need to learn; to accomplish any goal that you have set for yourself. This means there are no limits on what you can be, have or do.”
Like Us - https://www.facebook.com/FellowBuddycom
The document discusses various methods for valuing long-term securities such as bonds and stocks. It covers discounted cash flow models, required rates of return, and how to calculate the value of different types of bonds. For stocks, it explains dividend discount models and how growth rates impact the valuation of stocks. Key valuation ratios discussed include price-earnings, payout, and plowback ratios.
Math 533 ( applied managerial statistics ) final exam answersPatrickrasacs
This document provides the answers to the final exam for the MATH 533 (Applied Managerial Statistics) course. It includes answers to 8 multiple choice and calculation questions covering topics like hypothesis testing, confidence intervals, and linear regression. The questions analyze data related to job placement times, customer profiles, credit card usage, refueling times, toothpaste recommendations, paint defects, profit percentages, and land prices to determine probabilities, test claims, and estimate population parameters. The document also provides a link to download the full exam answers in PDF format and contact information for the company providing the exam assistance.
The document discusses the cost of capital and leverage for firms, including the weighted average cost of capital (WACC), beta and cost of equity calculations for levered firms using the Hamada equation, and how to determine the cost of capital for new projects, divisions, or companies based on their specific risk levels. Examples are provided to illustrate how to calculate WACC, levered beta, and cost of equity for firms and divisions with different capital structures and risk profiles.
This document provides an overview of key concepts regarding normal distributions, including:
- Normal distributions have properties such as being bell-shaped and symmetric about the mean. The mean, median and mode are equal for a normal distribution.
- The standard normal distribution has a mean of 0 and standard deviation of 1. Any normally distributed value can be converted to a z-score and related to the standard normal distribution.
- Areas under the normal curve can be used to find probabilities for normally distributed variables. Specific examples are provided to demonstrate finding probabilities and related values.
Percentage and its applications /COMMERCIAL MATHEMATICSindianeducation
The document discusses percentage and its applications. It begins by providing examples of percentages used in everyday contexts like sales, voter turnout, exam scores, and interest rates. It then defines percentage as a fraction with a denominator of 100 and discusses converting between percentages, fractions, and decimals. The objectives are to illustrate percentage concepts and solve problems involving profit/loss, discounts, simple/compound interest, rates of growth, and more. Background knowledge expected includes the four basic operations on whole numbers, fractions, and decimals. The document then explains calculating a specified percentage of a given number by converting the percentage to a fraction or decimal and multiplying. It provides several examples like finding percentage of marks scored, expenditures, increases/reductions.
The document discusses several key concepts related to calculating returns from investments and measuring risk, including:
1. Calculating expected returns by taking a weighted average of possible returns and their probabilities.
2. Defining and calculating historical return and historical risk using measures like standard deviation.
3. The implications of efficient markets where security prices instantly reflect all available information.
4. Diversification can reduce the risk of a portfolio compared to holding individual assets separately.
- Common stock represents ownership in a company. Stockholders elect directors who hire management to run the company. Different approaches can be used to value common stock, including the dividend growth model.
- Stock prices are determined by expected future dividends and the required rate of return. Small changes in expected growth rates or required returns can cause large changes in stock prices.
- The efficient market hypothesis states that securities prices fully reflect all available information. According to this hypothesis, it is difficult to "beat the market" consistently because stock market equilibrium is quickly reached as new information becomes public.
Shortfall aversion reflects the higher utility loss of a spending cut from a reference point than the utility gain from a similar spending increase, in the spirit of Prospect Theory's loss aversion. This paper posits a model of utility of spending scaled by a function of past peak spending, called target spending. The discontinuity of the marginal utility at the target spending corresponds to shortfall aversion. According to the closed-form solution of the associated spending-investment problem, (i) the spending rate is constant and equals the historical peak for relatively large values of wealth/target; and (ii) the spending rate increases (and the target with it) when that ratio reaches its model-determined upper bound. These features contrast with traditional Merton-style models which call for spending rates proportional to wealth. A simulation using the 1926-2012 realized returns suggests that spending of the very shortfall averse is typically increasing and very smooth.
The document discusses measures of dispersion, specifically standard deviation. It provides definitions and formulas for calculating standard deviation. It gives the characteristics and merits and demerits of standard deviation. Some sample problems are also provided to demonstrate calculating standard deviation and coefficient of variation from raw data, grouped data, and combined data from multiple samples.
This document discusses various mathematical topics including probability, powers and exponents, and linear equations. It provides learning outcomes, examples, and outlines for each topic. Probability concepts covered include sample space, events, and calculating probability. Laws of exponents and using exponents to solve problems are explained for powers and exponents. Properties and solving techniques for linear equations are also outlined. An example shows how linear equations can be used to model and calculate economic order quantity to minimize inventory costs.
This document discusses the constant growth dividend discount model and its implications. It explains that under this model, stock price is expected to grow at the same rate as dividends. The document also discusses how the price-earnings ratio can indicate growth opportunities and the potential pitfalls of using PE ratios.
1) This document discusses various topics related to common stock, including how stock represents ownership in a company and how stockholders elect directors who then hire management. It also discusses different types of stock like classified stock and tracking stock.
2) It provides an overview of how to value common stock using different approaches like the dividend growth model and comparing multiples of comparable firms. It includes an example of valuing a stock using the constant growth model.
3) The document discusses the cost of capital components including debt, preferred stock, and common equity. It provides examples of how to calculate the costs of each component.
Cost of debt (i.e, debentures and long term debt) is defined in terms of the required rate of return that the debt, investment must yield to protect the shareholders interest. Hence, Cost of debt is contractual interest rate, adjusted further for the tax liability of the firm.
Cost of DebtDebentures are issued at par, at a premium and discount. Cost of Redeemable Debt
The document discusses time value of money concepts including compounding, discounting, future value, and present value as they relate to single sums and annuities. It provides examples of calculating future value and present value for single sums deposited or received at a future date at a given interest rate. It also gives an example of calculating the future value of an annuity where the same amount is deposited each period for a number of periods at a given interest rate.
This document provides practice questions and answers related to valuing bonds. Specifically:
- It gives the calculations for determining the present value of various bonds with different coupon rates, payment frequencies, yields, and maturity dates.
- Tables show the effect of changing interest rates on the price of a bond over time.
- Questions ask the reader to calculate bond prices based on yields, determine if the expectations hypothesis holds based on changing forward rates, and compare the attractiveness of bonds with different coupons but the same yields.
- Duration and convexity are calculated for bonds to determine which has the highest risk given a rising yield curve. The relationship between bond prices and yields is examined.
In summary,
The document summarizes key concepts from chapters 1-2 of a textbook on petroleum economics and corporate finance. It discusses:
1) What a corporation is, how it differs from other business structures, and how ownership is separated from management through shareholders electing a board of directors to oversee top management.
2) The role of the financial manager in budgeting, financial projections, investment decisions, and interacting with financial markets to raise capital.
3) Key concepts in corporate finance like net present value analysis, discount rates, and opportunity cost of capital.
This document discusses mobilizing library services at UGent. It provides statistics on mobile internet and device usage that show strong growth. UGent surveyed students and found 43% use mobile internet for email, websites and articles. The document considers options like SMS, mobile websites, and native apps. UGent implemented a hybrid mobile app using Boopsie that provides services like searching, holds, and RSS feeds. The project took 4 months and cost about 4 weeks of a programmer's time.
The SKIP Program provides support groups for children with incarcerated parents. The program began in 1991 in response to requests from incarcerated parents. In the groups, children discuss their feelings about their parent's incarceration, build self-esteem through activities, and learn coping skills. The groups meet weekly for 12 weeks. Caregivers are involved and the program corresponds with incarcerated parents to keep them informed and maintain family connections. The overall goal is to help children and families cope with incarceration and break the cycle of intergenerational incarceration.
El documento presenta una agencia de marketing digital llamada Genes. La agencia se especializa en creatividad digital, marketing online y el uso de tecnología para crear experiencias interactivas para sus clientes. Ha trabajado para importantes marcas como Clarín, Disney y Kraft en proyectos como sitios web, banners publicitarios y aplicaciones móviles.
Leveraged and inverse ETFs seek a daily return equal to a multiple of an index' return, an objective that requires continuous portfolio rebalancing. The resulting trading costs create a tradeoff between tracking error, which controls the short-term correlation with the index, and excess return (or tracking difference) -- the long-term deviation from the levered index' performance. With proportional trading costs, the optimal replication policy is robust to the index' dynamics. A summary of a fund's performance is the \emph{implied spread}, equal to the product of tracking error and excess return, rescaled for leverage and average volatility. The implies spread is insensitive to the benchmark's risk premium, and offers a tool to compare the performance of funds on the same benchmark, but with different multiples and tracking errors.
This slide is for my presentation of a lecture series on risk and return. To watch the video of the lecture series, click this link to my YouTube channel
https://www.youtube.com/channel/UCDf-7a9UoewaGcnTtUJgtwA
FellowBuddy.com is an innovative platform that brings students together to share notes, exam papers, study guides, project reports and presentation for upcoming exams.
We connect Students who have an understanding of course material with Students who need help.
Benefits:-
# Students can catch up on notes they missed because of an absence.
# Underachievers can find peer developed notes that break down lecture and study material in a way that they can understand
# Students can earn better grades, save time and study effectively
Our Vision & Mission – Simplifying Students Life
Our Belief – “The great breakthrough in your life comes when you realize it, that you can learn anything you need to learn; to accomplish any goal that you have set for yourself. This means there are no limits on what you can be, have or do.”
Like Us - https://www.facebook.com/FellowBuddycom
The document discusses various methods for valuing long-term securities such as bonds and stocks. It covers discounted cash flow models, required rates of return, and how to calculate the value of different types of bonds. For stocks, it explains dividend discount models and how growth rates impact the valuation of stocks. Key valuation ratios discussed include price-earnings, payout, and plowback ratios.
Math 533 ( applied managerial statistics ) final exam answersPatrickrasacs
This document provides the answers to the final exam for the MATH 533 (Applied Managerial Statistics) course. It includes answers to 8 multiple choice and calculation questions covering topics like hypothesis testing, confidence intervals, and linear regression. The questions analyze data related to job placement times, customer profiles, credit card usage, refueling times, toothpaste recommendations, paint defects, profit percentages, and land prices to determine probabilities, test claims, and estimate population parameters. The document also provides a link to download the full exam answers in PDF format and contact information for the company providing the exam assistance.
The document discusses the cost of capital and leverage for firms, including the weighted average cost of capital (WACC), beta and cost of equity calculations for levered firms using the Hamada equation, and how to determine the cost of capital for new projects, divisions, or companies based on their specific risk levels. Examples are provided to illustrate how to calculate WACC, levered beta, and cost of equity for firms and divisions with different capital structures and risk profiles.
This document provides an overview of key concepts regarding normal distributions, including:
- Normal distributions have properties such as being bell-shaped and symmetric about the mean. The mean, median and mode are equal for a normal distribution.
- The standard normal distribution has a mean of 0 and standard deviation of 1. Any normally distributed value can be converted to a z-score and related to the standard normal distribution.
- Areas under the normal curve can be used to find probabilities for normally distributed variables. Specific examples are provided to demonstrate finding probabilities and related values.
Percentage and its applications /COMMERCIAL MATHEMATICSindianeducation
The document discusses percentage and its applications. It begins by providing examples of percentages used in everyday contexts like sales, voter turnout, exam scores, and interest rates. It then defines percentage as a fraction with a denominator of 100 and discusses converting between percentages, fractions, and decimals. The objectives are to illustrate percentage concepts and solve problems involving profit/loss, discounts, simple/compound interest, rates of growth, and more. Background knowledge expected includes the four basic operations on whole numbers, fractions, and decimals. The document then explains calculating a specified percentage of a given number by converting the percentage to a fraction or decimal and multiplying. It provides several examples like finding percentage of marks scored, expenditures, increases/reductions.
The document discusses several key concepts related to calculating returns from investments and measuring risk, including:
1. Calculating expected returns by taking a weighted average of possible returns and their probabilities.
2. Defining and calculating historical return and historical risk using measures like standard deviation.
3. The implications of efficient markets where security prices instantly reflect all available information.
4. Diversification can reduce the risk of a portfolio compared to holding individual assets separately.
- Common stock represents ownership in a company. Stockholders elect directors who hire management to run the company. Different approaches can be used to value common stock, including the dividend growth model.
- Stock prices are determined by expected future dividends and the required rate of return. Small changes in expected growth rates or required returns can cause large changes in stock prices.
- The efficient market hypothesis states that securities prices fully reflect all available information. According to this hypothesis, it is difficult to "beat the market" consistently because stock market equilibrium is quickly reached as new information becomes public.
Shortfall aversion reflects the higher utility loss of a spending cut from a reference point than the utility gain from a similar spending increase, in the spirit of Prospect Theory's loss aversion. This paper posits a model of utility of spending scaled by a function of past peak spending, called target spending. The discontinuity of the marginal utility at the target spending corresponds to shortfall aversion. According to the closed-form solution of the associated spending-investment problem, (i) the spending rate is constant and equals the historical peak for relatively large values of wealth/target; and (ii) the spending rate increases (and the target with it) when that ratio reaches its model-determined upper bound. These features contrast with traditional Merton-style models which call for spending rates proportional to wealth. A simulation using the 1926-2012 realized returns suggests that spending of the very shortfall averse is typically increasing and very smooth.
The document discusses measures of dispersion, specifically standard deviation. It provides definitions and formulas for calculating standard deviation. It gives the characteristics and merits and demerits of standard deviation. Some sample problems are also provided to demonstrate calculating standard deviation and coefficient of variation from raw data, grouped data, and combined data from multiple samples.
This document discusses various mathematical topics including probability, powers and exponents, and linear equations. It provides learning outcomes, examples, and outlines for each topic. Probability concepts covered include sample space, events, and calculating probability. Laws of exponents and using exponents to solve problems are explained for powers and exponents. Properties and solving techniques for linear equations are also outlined. An example shows how linear equations can be used to model and calculate economic order quantity to minimize inventory costs.
This document discusses the constant growth dividend discount model and its implications. It explains that under this model, stock price is expected to grow at the same rate as dividends. The document also discusses how the price-earnings ratio can indicate growth opportunities and the potential pitfalls of using PE ratios.
1) This document discusses various topics related to common stock, including how stock represents ownership in a company and how stockholders elect directors who then hire management. It also discusses different types of stock like classified stock and tracking stock.
2) It provides an overview of how to value common stock using different approaches like the dividend growth model and comparing multiples of comparable firms. It includes an example of valuing a stock using the constant growth model.
3) The document discusses the cost of capital components including debt, preferred stock, and common equity. It provides examples of how to calculate the costs of each component.
Cost of debt (i.e, debentures and long term debt) is defined in terms of the required rate of return that the debt, investment must yield to protect the shareholders interest. Hence, Cost of debt is contractual interest rate, adjusted further for the tax liability of the firm.
Cost of DebtDebentures are issued at par, at a premium and discount. Cost of Redeemable Debt
The document discusses time value of money concepts including compounding, discounting, future value, and present value as they relate to single sums and annuities. It provides examples of calculating future value and present value for single sums deposited or received at a future date at a given interest rate. It also gives an example of calculating the future value of an annuity where the same amount is deposited each period for a number of periods at a given interest rate.
This document provides practice questions and answers related to valuing bonds. Specifically:
- It gives the calculations for determining the present value of various bonds with different coupon rates, payment frequencies, yields, and maturity dates.
- Tables show the effect of changing interest rates on the price of a bond over time.
- Questions ask the reader to calculate bond prices based on yields, determine if the expectations hypothesis holds based on changing forward rates, and compare the attractiveness of bonds with different coupons but the same yields.
- Duration and convexity are calculated for bonds to determine which has the highest risk given a rising yield curve. The relationship between bond prices and yields is examined.
In summary,
The document summarizes key concepts from chapters 1-2 of a textbook on petroleum economics and corporate finance. It discusses:
1) What a corporation is, how it differs from other business structures, and how ownership is separated from management through shareholders electing a board of directors to oversee top management.
2) The role of the financial manager in budgeting, financial projections, investment decisions, and interacting with financial markets to raise capital.
3) Key concepts in corporate finance like net present value analysis, discount rates, and opportunity cost of capital.
This document discusses mobilizing library services at UGent. It provides statistics on mobile internet and device usage that show strong growth. UGent surveyed students and found 43% use mobile internet for email, websites and articles. The document considers options like SMS, mobile websites, and native apps. UGent implemented a hybrid mobile app using Boopsie that provides services like searching, holds, and RSS feeds. The project took 4 months and cost about 4 weeks of a programmer's time.
The SKIP Program provides support groups for children with incarcerated parents. The program began in 1991 in response to requests from incarcerated parents. In the groups, children discuss their feelings about their parent's incarceration, build self-esteem through activities, and learn coping skills. The groups meet weekly for 12 weeks. Caregivers are involved and the program corresponds with incarcerated parents to keep them informed and maintain family connections. The overall goal is to help children and families cope with incarceration and break the cycle of intergenerational incarceration.
El documento presenta una agencia de marketing digital llamada Genes. La agencia se especializa en creatividad digital, marketing online y el uso de tecnología para crear experiencias interactivas para sus clientes. Ha trabajado para importantes marcas como Clarín, Disney y Kraft en proyectos como sitios web, banners publicitarios y aplicaciones móviles.
This document contains a personality test composed of 4 questions. It asks the reader to provide preferences among various animals and colors, associate people with colors, and choose a favorite number and day of the week. It then provides interpretations for each answer, suggesting they reveal aspects of one's personality, priorities, and relationships. It encourages the reader to send the message to others according to their favorite number for good luck and fortune.
El documento resume la carta del Arzobispo de Valladolid sobre los sacramentos de la iniciación cristiana. El Arzobispo destaca dos puntos principales: 1) La iniciación cristiana es un proceso único que incluye el bautismo, la confirmación y la eucaristía. 2) Los fundamentos de la iniciación son la fe, los sacramentos (especialmente la eucaristía), los mandamientos, y la oración (especialmente el padre nuestro). El nuevo Directorio Diocesano guiará la
El documento habla sobre la inclusión del proyecto transversal de seguridad vial en los planes de estudio y proyectos de aula. Se destaca la importancia de que los estudiantes dominen los elementos del código visual para interpretar mensajes en su entorno, como las señales de tránsito. Los proyectos buscan desarrollar competencias de lenguaje a través de la creación de historietas y cuentos sobre seguridad vial.
Digital Pulse Summit - The Forces Shaping the Web - Mike Lundgren, VMLDigital Clarity Group
This document discusses several forces shaping the digital world and marketing, including the growing number of people going online through mobile devices. It emphasizes that the attention economy requires engaging audiences rather than interrupting them. Brands need to entertain and find the right balance of engaging information without being too brand-focused or entertainment-focused. Emerging technologies like augmented reality, gamification, and internet of things are converging to create frictionless experiences. Privacy and identity are also evolving factors. The document advocates considering how to apply these forces to solve problems and create new opportunities.
Revista Oficial ANECPLA: Infoplagas. Nº 51 JUN 2013ANECPLA
El documento habla sobre la nueva especie de cucaracha Supella longipalpa que amenaza con asentarse en España, la reunión de la Confederación Europea de Asociaciones de Control de Plagas (CEPA) en la sede de ANECPLA en Madrid, y los continuos encuentros entre ANECPLA y el Ministerio de Sanidad sobre la normativa de capacitación para realizar tratamientos con biocidas.
Este documento presenta un ejercicio fotográfico con una Canon EOS 550D que incluye tomar fotos explorando conceptos como la exposición, profundidad de campo, distancia focal, modos de disparo, balance de blancos, enfoque y medición para resaltar formas geométricas. El ejercicio propone realizar diversas tomas enfocando en capturar movimiento, equivalencias de exposición y efectos de profundidad de campo.
El documento describe varios proyectos de diseño gráfico y conferencias realizados por el autor. Incluye el diseño de carteles y materiales de identidad para conferencias, revistas, congresos y exposiciones. También menciona la creación de canales en redes sociales y videos, así como su participación como ponente en diversos eventos.
El poema describe la división y el conflicto en España, representado por un hacha que cae implacablemente sobre todo lo que intenta unirse o congregarse. No hay bandos políticos distintos, sólo polvo, resultado de la destrucción causada por el hacha. El hacha ha dividido a España y su gente a lo largo de la historia, convirtiéndolo todo en polvo. El poema lamenta que la envidia haya dominado sobre el honor en España y que el pueblo español haya cuidado más el hacha que la esp
Un fax fue enviado por Sergio y compañía desde la dirección b/ de la cruz 51 a un destinatario desconocido. El fax no incluye el número de páginas ni el contenido del mensaje.
El documento describe las características de un consumidor inteligente, incluyendo tomar decisiones meditadas, conocer los impactos económicos, sociales y ambientales de sus decisiones, y participar en el desarrollo sostenible de su comunidad. Un consumidor inteligente evalúa el alcance de sus acciones y compra localmente debido a las ventajas como menos contaminación, empleos, y relaciones personales.
La conciencia postural es el trabajo que día a día ofrece Pilar Domínguez en sus centros, donde se imparten clases de la mecánica corporal preventiva y paliativa que ella misma ha creado y que está ayudando a profesionales del deporte y lo que es más importante, a las personas de a pie. Su labor se centra en un constante trabajo de corrección y concienciación postural de los alumnos y pacientes derivados por profesionales de la salud.
Bebe nació en Valencia, España y creció rodeada de música debido a que sus padres eran músicos. Comenzó a tocar la guitarra a los 11 años y en 1995 inició su carrera como corista. Kim Hyun Joong es un cantante, actor y modelo surcoreano nacido en 1986 que siempre quiso unirse a una banda extranjera. Lee Min Ho nació en Seúl en 1987 y soñaba con ser futbolista antes de una lesión que terminó con ese sueño. Kim Bum Soo nació en 1979 y fue el primer
Phuket Overv iew
• Phuket has the highest number of
tourists in the Southern tourism
region
• Phuket has four maritime ports and
yacht marinas on its northeastern
coast that can serve tourists accessing
islands in Phang Nga Bay and
offshore from Krabi which means
Phuket is at the forefront in the
Andaman Sea region in promoting
resorts for the yachting circle
• Phuket is a center for sailing
competitions with major regattas,
such as the Phuket King’s Cup Regatta,
being held every year
• Small and medium enterprises
(SMEs) in Phuket have been growing
tremendously. Aside from boosting
income and attracting more tourists,
the SMEs also help to expand the
economy resulting in brisk exchanges,
the creation of jobs and increased
spending.
El documento presenta los resultados de un ensayo biotecnológico realizado por tres estudiantes para analizar la presencia o ausencia de la secuencia ALU en el ADN. Los resultados muestran que dos estudiantes son homocigotos negativos y uno no tiene resultado. También incluye las frecuencias genotípicas y alélicas para la clase y posibles causas para la falta de resultado en un estudiante.
Dear Sir/Madam,
Our Company ISISO is the producer of (Chillers and Heat Pump, Water Cooling Towers, Cooling Air Conditioning Systems, Mechatronic Designs) and we would like to make our company and its products known to you. Enclosed is a brochure which gives you general information about our products. . If you are interested, please visit our web site (www.isisosogutma.com.tr) or contact us (info@isisosogutma.com.tr) . We will be happy to send you any further information. We may be available in the near future to discuss the subject with you as well.
Thanking for your kind interest
Best Regards
This document contains practice problems related to risk and return. It discusses different types of risk like sales risk, operating risk, interest rate risk, and how they can vary between firms or bonds. It also covers risk measurement by calculating expected values and standard deviations for probability distributions. Other topics include the capital asset pricing model, portfolio risk and return, diversification, and how correlation between investments affects portfolio risk.
Managerial economics studies how to direct scarce resources efficiently to achieve managerial goals. Levi Strauss & Co. paid $46,532 for a 110-year-old pair of jeans in an eBay auction, representing consumer-consumer rivalry as buyers competed for the antique item. The maximum amount to pay for an asset generating $150,000 income annually for 5 years with a 9% opportunity cost is $583,458. Net benefits are maximized at a quantity of 2 units for a firm with total benefit of B(Q)=150+28Q-5Q^2 and total cost of C(Q)=100+8Q.
This document contains solutions to problems from Chapter 16 on hybrid and derivative securities. The problems cover various topics such as lease cash flows, loan interest calculations, loan amortization schedules, comparing leases to purchases, determining values of convertible bonds and attached warrants, and calculating theoretical warrant values. The solutions provide numerical calculations and explanations for each problem.
The document contains examples of calculating probabilities of default for bonds and credit portfolios using various inputs like probability of default, loss given default, recovery rates, bond yields, risk free rates, and firm value volatility. The key calculations shown include probability of 1, 2, or more bonds defaulting in a portfolio; cumulative default probability over multiple periods; implied default probability from bond-Treasury yield spreads; and default probability estimation using Merton model inputs like firm value, debt, and equity volatility.
This document contains a list of CSEC Model Examination papers including Paper 1 and Paper 2 for Exams 1 through 5. It provides sample questions, answers and explanations for CSEC Model Exam 1 Paper 1 which covers topics like operations with decimals, percentages, ratios, rates and proportions. There are 38 multiple choice questions testing various mathematics concepts along with step-by-step workings for each answer.
STUDENTS Andres Hoyos Joy Hwang Alicia Klassanoff L.docxAASTHA76
STUDENTS:
Andres Hoyos Joy Hwang Alicia Klassanoff Ljubomir Petrovic
Bronco Vuskovich Maira Alejandra Soto Alice Benatar
ASSIGNMENT 2
Problem 1:
There are three major business organization forms from start-up to a major corporation. What are
these three business organization forms? What are advantages and disadvantages for each
organization form?
Advantages and Disadvantages of Business Organizations
Easy to
create
Easy to
raise
capital
Taxes
paid once
as
personal
income
Limited
Liability
Unlimited
Life
Easy to
transfer
Ownership
Management
by the
owners
Easy to
make
decisions
Sole
Proprietorship
Partnership
Corporation
100% possible
50% possible
Difficult or impossible
Problem 2:
Based on the chart below, answer the following two questions.
1. If the value of the firm is 10 million, and $F is 12 million, how much will be the payoff to debt
holders and how much will be the payoff to shareholders?
Debt Holders: $ 10 million
Shareholders: $ 0
2. If the value of the firm is 25 million, and $F is 12 million, how much will be the payoff to debt
holders and how much will be the payoff to shareholders?
Debt Holders: $ 12 million
Shareholders: $ 13 million
Problem 3:
Assume that you are nearing graduation and have applied for a job with a local bank. As part of
the bank's evaluation process, you have been asked to take an examination that covers several
financial analysis techniques. The first section of the test addresses discounted cash flow
analysis. See how you would do by answering the following questions.
a. Draw time lines for (1) a $100 lump sum cash flow at the end of Year 2, and (2) an uneven
cash flow stream of -$50, $100, $75, and $50 at the end of Years 0 through 3.
b. What's the future value of an initial $100 after 3 years if it is invested in an account paying
10% annual interest and compounded annually? How about if the interest is compounded
monthly, daily or hourly?
Compounded
Annually
Compounded
Monthly
Compounded Daily Compounded Hourly
Rate 𝑟 = 0.1 𝑟 =
0.1
12
= 0.0083 𝑟 =
0.1
365
= 0.00027 𝑟 =
0.1
365 × 24
= 0.000011
Period 𝑛 = 3 𝑛 = 3 × 36 𝑛 = 3 × 365 = 1095 𝑛 = 3 × 365 × 24 = 26280
𝑭𝑽 = 𝑷𝑽 × (𝟏 + 𝒓)𝒏
𝐹𝑉 = 100 × (1 + 0.1)3
𝐹𝑉 = 100 × 0.0083)36
𝐹𝑉 = 100 × (1 +
0.1
0.00027
)1095
𝐹𝑉 = 100 × (1 +
0.1
0.000011
)26280
FUTURE
VALUE
$133.10 $134.82 $134.98 $134.99
c. What is the present value of $100 to be received in 3 years if the annual interest rate is
10% and compounded annually? How about if the interest is compounded monthly, daily
or hourly?
Compounded
Annually
Compounded
Monthly
Compounded Daily Compounded Hourly
Rate 𝑟 = 0.1 𝑟 =
0.1
12
= 0.0083 𝑟 =
0.1
365
= 0.00027 𝑟 =
0.1
365 × 24
= 0.000011
Period 𝑛 = 3 𝑛 = 3 × 36 𝑛 = 3 × 365 = 1095 𝑛 = 3 × 365 × 24 = 2
The document discusses value at risk (VAR) calculations for various portfolio scenarios. It provides examples of calculating 1-day, 10-day and annual VAR using standard deviations and confidence levels. It also demonstrates how to calculate VAR for combined portfolios accounting for correlations between assets. VAR is calculated for portfolios containing stocks, bonds, currencies and other financial instruments.
The document contains statistics lab report scores for 8 students who spent varying amounts of time preparing. It includes the regression equation relating hours spent to score and predicts a score for someone who spent 1 hour. It also defines the correlation coefficient and explains it measures the strength of the linear relationship between two variables.
College Algebra MATH 107 Spring, 2015, V4.8 Page 1 of .docxmonicafrancis71118
This document provides instructions and requirements for a PowerPoint presentation project on a student's chosen career. The presentation must include 10-12 slides covering: an introduction of the student and research topic, an outline, background on the career path and reasons for choice, educational requirements, pay ranges in three regions, and a summary and conclusion slide. References must be in MLA format. The presentation will be graded based on inclusion of required elements, design features like themes and visual elements, transitions and animations, and correct spelling and grammar.
Blank L, Tarquin A (2006) Solucionario Engineering Economy (6th ed).pdfArmandoGarza26
This document provides information about solucionarios, or solutions manuals, for university textbooks and books. It states that the solutions manuals contain step-by-step solutions to all the problems in the textbooks. It invites the reader to download the solucionarios for free from their blogspot website, providing the URL. It also contains some sample pages from economics and engineering economy textbooks, showing examples of solved problems.
I am Travis F. I am a Finance Exam Helper at liveexamhelper.com. I hold a Masters' Degree in Finance, University of Alberta, Canada. I have been helping students with their exams for the past 10 years. You can hire me to take your exam on Finance.
Visit liveexamhelper.com or email info@liveexamhelper.com.
You can also call on +1 678 648 4277 for any assistance with Finance Exams.
TRUEFALSE. Write T if the statement is true and F if the stat.docxwillcoxjanay
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
(Worth .25 points each or 2.5 points for this section)
1) For a given positive interest rate, the future value of $100 increases with the passage of time. Thus,
the longer the period of time, the greater the future value.
2) Future value is the value of a future amount at the present time, found by applying compound
interest over a specified period of time.
3) The aggressive financing strategy is a strategy by which the firm finances its current assets with
short-term funds and its fixed assets with long-term funds.
4) Combining negatively correlated assets can reduce the overall variability of returns.
5) A portfolio that combines two assets having perfectly positively correlated returns cannot reduce
the portfolio's overall risk below the risk of the least risky asset.
6) In general, exchange rate risk is easier to protect against than political risk.
7) In selecting the best group of unequal-lived projects, if the projects are mutually exclusive, the
length of the projects lives is not critical.
8) The EBIT-EPS analysis tends to concentrate on maximization of earnings rather than maximization
of owners' wealth.
9) The three basic types of risk associated with international cash flows are 1) business and financial
risks, 2) inflation and foreign exchange risks, and 3) political risks.
10) Accounts payable result from transactions in which merchandise is purchased but no formal note is
signed to show the purchaser's liability to the seller.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
(Worth .50 points each or 9.5 points for this section)
11) When the amount earned on a deposit has become part of the principal at the end of a specified
time period the concept is called
A) future value. B) discount interest.
C) compound interest. D) primary interest.
12) The future value of $100 received today and deposited at 6 percent for four years is
A) $126. B) $124. C) $ 79. D) $116.
13) As the interest rate increases for any given period, the future value interest factor will
A) decrease. B) increase.
C) move toward 1. D) remain unchanged.
14) The present value of $100 to be received 20 years from today, assuming an opportunity cost of 8
percent, is
A) $ 42.24. B) $ 75. C) $23.60. D) $21.45.
15) The ________ financing strategy requires the firm to pay interest on excess funds borrowed but not
needed throughout the entire year.
A) seasonal B) conservative C) permanent D) aggressive
16) Strikes, lawsuits, regulatory actions, and increased competition are all examples of
A) nondiversifiable risk. B) economic risk.
C) systematic. D) diversifiable risk.
Table 5.2
You are going to invest $20,000 in a portfolio consisting of assets X, Y, and Z, as follows:
Asset Name
Annual
Asset Return
Probability
Beta
Proportion
X
10%
.50
1.2
.333
Y
8%
.25
1.6
.333
Z
16%
.25
2.0
.333
17) Given the information i ...
The document contains 25 math questions with explanations of the answers. It covers topics like sets, functions, percentages, rates, time/distance word problems, and coordinate geometry. The questions are multiple choice and range from basic math skills to more advanced algebra and geometry concepts.
This document provides examples and explanations for calculating percentage discounts and successive percentage discounts. It begins by defining percentage and providing examples of calculating percentages of amounts. It then discusses calculating the single equivalent discount for two successive discounts, providing the formula and examples of calculating the single equivalent discount for successive discounts ranging from 10-40%. It concludes with word problems applying the calculation of successive discounts to real-world shopping and pricing scenarios.
CFA LEVEL 1- Time Value of Money_compressed (1).pdfAlison Tutors
This document focuses on End of Chapter questions and commonly asked questions under Quantitative methods (Time Value of Money ) . The mainly asked questions include :
-calculation and interpretation of Future Value and Present Value of a single sum of money , an ordinary annuity, annuity due, a perpetuity (PV only) and a series of unequal cash flows.
-demonstration of the use of timelines in modeling and solving time value of money
This is a very interesting topic!
The document provides an agenda for a Friday class including warm-up exercises on percent of change and percent mark-up/discount, assignments due, and test reminders. It also includes sample math problems working through calculating percentages, percent increases and decreases, discounts, markups, and using proportions to solve for unknown values related to percentage word problems.
This document provides a summary of key concepts and formulas for a statistics final exam. It includes examples of hypothesis tests, confidence intervals, descriptive statistics, probability calculations, and interpreting correlation. Questions cover topics like regression analysis, the normal distribution, sampling, and distinguishing between binomial and Poisson distributions. Formulas and explanations are provided for concepts like variance, standard deviation, z-scores, and determining minimum sample sizes.
This document provides a summary of key concepts and formulas for a statistics final exam. It includes examples of hypothesis tests, confidence intervals, descriptive statistics, probability calculations, and interpreting correlation. Multiple choice questions are presented along with step-by-step workings to find probabilities, means, medians, modes, variances, and conduct hypothesis testing. Formulas for regression, the normal distribution, and sampling are also reviewed along with examples of interpreting stem-and-leaf plots, sample sizes, and evaluating data normality.
This document contains notes and practice problems for a math lesson on percents. It includes examples of finding percent increases and decreases, percent discounts and markups, and solving proportions involving percents. Warm-up questions ask students to find 70% of 1/2 and change fractions and percents to decimals. The document then provides examples and practice problems for students to work through related to percents.
Similar to Brealey. myers. allen chapter 21 test (20)
How to Setup Warehouse & Location in Odoo 17 InventoryCeline George
In this slide, we'll explore how to set up warehouses and locations in Odoo 17 Inventory. This will help us manage our stock effectively, track inventory levels, and streamline warehouse operations.
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
-------------------------------------------------------------------------------
Find out more about ISO training and certification services
Training: ISO/IEC 27001 Information Security Management System - EN | PECB
ISO/IEC 42001 Artificial Intelligence Management System - EN | PECB
General Data Protection Regulation (GDPR) - Training Courses - EN | PECB
Webinars: https://pecb.com/webinars
Article: https://pecb.com/article
-------------------------------------------------------------------------------
For more information about PECB:
Website: https://pecb.com/
LinkedIn: https://www.linkedin.com/company/pecb/
Facebook: https://www.facebook.com/PECBInternational/
Slideshare: http://www.slideshare.net/PECBCERTIFICATION
Reimagining Your Library Space: How to Increase the Vibes in Your Library No ...Diana Rendina
Librarians are leading the way in creating future-ready citizens – now we need to update our spaces to match. In this session, attendees will get inspiration for transforming their library spaces. You’ll learn how to survey students and patrons, create a focus group, and use design thinking to brainstorm ideas for your space. We’ll discuss budget friendly ways to change your space as well as how to find funding. No matter where you’re at, you’ll find ideas for reimagining your space in this session.
it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
How to Manage Your Lost Opportunities in Odoo 17 CRMCeline George
Odoo 17 CRM allows us to track why we lose sales opportunities with "Lost Reasons." This helps analyze our sales process and identify areas for improvement. Here's how to configure lost reasons in Odoo 17 CRM
This presentation was provided by Steph Pollock of The American Psychological Association’s Journals Program, and Damita Snow, of The American Society of Civil Engineers (ASCE), for the initial session of NISO's 2024 Training Series "DEIA in the Scholarly Landscape." Session One: 'Setting Expectations: a DEIA Primer,' was held June 6, 2024.
Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
Main Java[All of the Base Concepts}.docxadhitya5119
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
Walmart Business+ and Spark Good for Nonprofits.pdfTechSoup
"Learn about all the ways Walmart supports nonprofit organizations.
You will hear from Liz Willett, the Head of Nonprofits, and hear about what Walmart is doing to help nonprofits, including Walmart Business and Spark Good. Walmart Business+ is a new offer for nonprofits that offers discounts and also streamlines nonprofits order and expense tracking, saving time and money.
The webinar may also give some examples on how nonprofits can best leverage Walmart Business+.
The event will cover the following::
Walmart Business + (https://business.walmart.com/plus) is a new shopping experience for nonprofits, schools, and local business customers that connects an exclusive online shopping experience to stores. Benefits include free delivery and shipping, a 'Spend Analytics” feature, special discounts, deals and tax-exempt shopping.
Special TechSoup offer for a free 180 days membership, and up to $150 in discounts on eligible orders.
Spark Good (walmart.com/sparkgood) is a charitable platform that enables nonprofits to receive donations directly from customers and associates.
Answers about how you can do more with Walmart!"
Walmart Business+ and Spark Good for Nonprofits.pdf
Brealey. myers. allen chapter 21 test
1. Brealey/Myers/Allen, Principles of Corporate Finance, 8/e 1
Chapter 21
Valuing Options
Multiple Choice Questions
1. Relative to the underlying stock, a call option always has:
A) A higher beta and a higher standard deviation of return
B) A lower beta and a higher standard deviation of return
C) A higher beta and a lower standard deviation of return
D) A lower beta and a lower standard deviation of return
Answer: A Type: Difficult Page: 565
2. A call option has an exercise price of $100. At the final exercise date, the stock price could be
either $50 or $150. Which investment would combine to give the same payoff as the stock?
A) Lend PV of $50 and buy two calls
B) Lend PV of $50 and sell two calls
C) Borrow $50 and buy two calls
D) Borrow $50 and sell two calls
Answer: A Type: Difficult Page: 566
Response: Value of two calls: 2 (150 - 100) = 100 or value of two calls =: 2(0) = 0 (not exercised);
payoff = 100 + 50 = 150 or payoff = 0 + 50 = 50
3. The option delta is calculated as the ratio:
A) (the spread of possible share prices) / (the spread of possible option prices)
B) (the share price) / (the option price)
C) (the spread of possible option prices) / (the spread of possible share prices)
D) (the option price) / (the share price)
Answer: C Type: Medium Page: 567
4. Suppose Ralph's stock price is currently $50. In the next six months it will either fall to $30 or rise
to $80. What is the option delta of a call option with an exercise price of $50?
A) 0.375
B) 0.500
C) 0.600
D) 0.75
Answer: C Type: Medium Page: 567
Response: Option delta = (30 - 0)/(80 - 30) = 30/50= 0.6
2. Test Bank, Chapter 212
5. Suppose Waldo's stock price is currently $50. In the next six months it will either fall to $40 or
rise to $60. What is the current value of a six-month call option with an exercise price of $50? The
six-month risk-free interest rate is 2% (periodic rate).
A) $5.39
B) $15.00
C) $8.25
D) $8.09
Answer: A Type: Difficult Page: 567
Response:
Replicating portfolio method: Call option payoff = 60 -50 = 10 and zero;
(60)(A) + (1.02)(B) = 10, (40)(A) + 1.02(B) = 0; A = 0.5 (option delta) &
B = -19.61; call option price (current) = 0. 5(50) - 19.61 = $5.39
Risk- neutral valuation: 50 = [x(60) + (1-x)40]/1.02) ; x = 0. 55; (1-x )= 0.45;
Call option value = [(0.55)(10) + (0.45)(0)]/(1.02) = $5.39
6. Suppose Waldo's stock price is currently $50. In the next six months it will either fall to $40 or
rise to $80. What is the current value of a six-month call option with an exercise price of $50? The
six-month risk-free interest rate is 2% (periodic rate).
A) $2.40
B) $15.00
C) $8.25
D) $8.09
Answer: D Type: Difficult Page: 567
Response:
Replicating portfolio method: Call option payoff = 80-50 = 30 and zero;
(80)(A) + (1.02)(B) = 30, (40)(A) + 1.02(B) = 0; A = 0.75 (option delta) &
B = -29.41; call option price (current) = 0.75(50) - 29.41 = $8.09
Risk- neutral valuation: 50 = [x(80) + (1-x)40]/1.02) ; x = 0.275; (1-x )= 0.725;
Call option value = [(0.275)(30) + (0.725)(0)]/(1.02) = $8.09
7. Suppose Ann's stock price is currently $25. In the next six months it will either fall to $15 or rise
to $40. What is the current value of a six-month call option with an exercise price of $20? The
six-month risk-free interest rate is 5% (periodic rate). [Use the risk-neutral valuation method]
A) $20.00
B) $8.57
C) $9.52
D) $13.10
Answer: B Type: Difficult Page: 567
Response: Method I: 25 = [x(40) + (1-x)15]/1.05 ; x = 0.45 1- x =0.55
Call option price = [(0.45)(20) + (0.71875)(0)]/(1.05) = $8.57
3. Brealey/Myers/Allen, Principles of Corporate Finance, 8/e 3
8. Suppose Ann's stock price is currently $25. In the next six months it will either fall to $15 or rise
to $40. What is the current value of a six-month call option with an exercise price of $20? The
six-month risk-free interest rate is 5% (periodic rate). [Use the replicating portfolio method]
A) $20.00
B) $8.57
C) $9.52
D) $13.10
Answer: B Type: Difficult Page: 567
Response: 40(A) + 1.05(B) = 20; 15(A) +1.05(B) = 0; A = 0.8; B = -11.43
Call option price = 25(0.8) - 11.43 = $8.57
9. Suppose Carol's stock price is currently $20. In the next six months it will either fall to $10 or rise
to $40. What is the current value of a six-month call option with an exercise price of $12? The
six-month risk-free interest rate (periodic rate) is 5%. [Use the risk-neutral valuation method]
A) $9.78
B) $10.28
C) $16.88
D) $13.33
Answer: A Type: Difficult Page: 567
Response: 20 = [x(40) + (1-x)(10)]/ 1.05 ; x = 0.367; (1-x) = 0.633
Call option price = [(0.367)(28) + (0.633)(0)]/(1.05) = $9.78
10. Suppose Carol's stock price is currently $20. In the next six months it will either fall to $10 or
rise to $40. What is the current value of a six-month call option with an exercise price of $12? The
six-month risk-free interest rate (periodic rate) is 5%. [Use the replicating portfolio method]
A) $9.78
B) $10.28
C) $16.88
D) $13.33
Answer: A Type: Difficult Page: 567
Response: 40(A) + 1.05 (B) = 28; 10(A) + 1.05(B) = 0; A = 0.9333; B = -8.89
Call option price = (0.9333)(25) - 8.89 = 9.78
11. Suppose Victoria's stock price is currently $20. In the next six months it will either fall to $10 or
rise to $30. What is the current value of a put option with an exercise price of $12? The six-month
risk-free interest rate is 5% (periodic rate).
A) $9.78
B) $2.00
C) $0.86
D) $9.43
Answer: C Type: Difficult Page: 568
Response:
Replicating portfolio method: 30(A) + 1.05 (B) = 0; & 10 (A) + 1.05(B) = 2;
A = - 0.1(option delta) & B = 2.86; Put option price = -(0.1)(20) + 2.86 = 0.86;
Risk-neutral valuation: 20 = [x(30) + (1-x)(10)]/1.05; x = 0.55 and (1-x) = 0.45
Put option price = [(0.55)(0) + (0.45)(2)]/(1.05) = 0.86
4. Test Bank, Chapter 214
12. The delta of a put option is always equal to:
A) The delta of an equivalent call option
B) The delta of an equivalent call option with a negative sign
C) The delta of an equivalent call option minus one
D) None of the above
Answer: C Type: Difficult Page: 569
13. If the delta of a call option is 0.6, calculate the delta of an equivalent put option
A) 0.6
B) 0.4
C) – 0.4
D) –0.6
Answer: C Type: Difficult Page: 569
Response: 0.6 - 1 = -0.4
14. Suppose Victoria's stock price is currently $20. Six-month call option on the stock with an
exercise price of $12 has a value of $9.43. Calculate the price of an equivalent put option if the
six-month risk-free interest rate is 5% (periodic rate).
A) $0.86
B) $9.43
C) $8.00
D) $12.00
Answer: A Type: Difficult Page: 570
Response: Value of Put = 9.43 - 20 + 12/(1.05) = $0.8
15. If e is the base of natural logarithms, and (ó) is the standard deviation of the continuously
compounded annual returns on the asset, and h is the interval as a fraction of a year, then the quantity (1
+ upside change) is equal to:
A) e^[(ó)?*SQRT(h)]
B) e^[h*SQRT(ó)]
C) (ó)?e^[SQRT(h)]
D) none of the above.
Answer: A Type: Difficult Page: 574
16. If u equals the quantity (1+ upside change), then the quantity (1 + downside change) is equal to:
A) –u
B) –1/u
C) 1/u
D) none of the above.
Answer: C Type: Medium Page: 574
5. Brealey/Myers/Allen, Principles of Corporate Finance, 8/e 5
17. If the standard deviation of the continuously compounded annual returns (ó ) on the asset is 40%,
and the time interval is a year, then the upside change is equal to:
A) 88.2%
B) 8.7%
C) 63.2%
D) 49.18%
Answer: D Type: Difficult Page: 574
Response: (1 + u) = e^(0.4) = 1.4918 or upside change = 49.18%
18. If the standard deviation for continuously compounded annual returns on the asset is 40% and the
interval is a year, then the downside change is equal to:
A) 27.4%
B) 53.6%
C) 32.97%
D) 38.7%
Answer: C Type: Difficult Page: 574
Response:
(1 + u) = e^[(0.4*1)] =1.4182 ; downside change = 1/1.4182 = 1 + d =0.67032
d = -0.3297 ; down % = 32.97%
19. If the standard deviation of continuously compounded annual returns on the asset is 20% and the
interval is half a year, then the downside change is equal to:
A) 37.9%
B) 19.3%
C) 20.1%
D) 13.2%
Answer: D Type: Difficult Page: 574
Response: (1+ u) = e^[(0.2)*] = 1.152 or d= 1/1.152 = .868 or downside change = 13.2%
20. If the standard deviation of continuously compounded annual returns on the asset is 40% and the
interval is a year, then the downside change is equal to :
A) 27.4%
B) 53.6%
C) 33.0%
D) 38.7%
Answer: C Type: Difficult Page: 574
Response: (1 + u)=e^(0.4) = 1.492 or (1+d)= 1/1.492 = 0.67 or downside change = 33%
6. Test Bank, Chapter 216
21. A stock is currently selling for $50. The stock price could go up by 10% or fall by 5% each
month. The monthly interest rate is 1% (periodic rate). Calculate the price of a European call option on
the stock with an exercise price of $50 and a maturity of two months. (use the two-stage binomial
method)
A) $5.10
B) $2.71
C) $4.78
D) $3.62
Answer: B Type: Difficult Page: 574
Response: 50 = [55(x) + 47.5(1-x)]/(1.01) ; x = 0.4; 1-x = 0.6
Payoffs at the end of month-2: $10.5; $2.25 ; and zero; [Exercise price = $50]
End of one month values: [(10.5)(0.4) + 2.25(0.6)]/1.01 = 5.495 and [2.25(0.4) + 0]/1.01 = 0.891
Price of the call option = [5.495(0.4) + (0.891)(0.6)]/1.01 = 2.71
22. An European call option with an exercise price of $50 has a maturity (expiration) of six months,
stock price of $54 and the instantaneous variance of the stock returns 0.64. The risk-free rate is
9.2%. Calculate the value of d2 (approximately).
A) +0.0656
B) –0.0656
C) +0.5656
D) –0.5656
Answer: B Type: Medium Page: 576
Response: d2 = 0.5 - 0.8(0.5^0.5) = - 0.0656
23. An European call option with an exercise price of $50 has a maturity (expiration) of six months,
stock price of $54 and the instantaneous variance of the stock returns 0.64. The risk-free rate is 9.2%.
Then [d1] has a value of (approximately):
A) 0.3
B) 0.7
C) –0.7
D) 0.5
Answer: D Type: Difficult Page: 576
Response: d1= [ln(54/50) + (0.092 + (0.64/2))(0.5)]/[(0.8)(0.7071)] = 0.5
24. Cola Company has call options on its common stock traded in the market. The options have an
exercise price of $45 and expire in 156 days. The current price of the Cola stock is $44.375. The
risk-free rate is $7% per year and the standard deviation of the stock returns is 0.31. The value of [d1]
is (approximately):
A) 0.0226
B) 0.18
C) –0.3157
D) 0.3157
Answer: B Type: Difficult Page: 576
Response: d1 = [ln(44.375/45) + [0.07 +(0.096/2)][165/365]/[(0.31)(0.6538)] = 0.18
7. Brealey/Myers/Allen, Principles of Corporate Finance, 8/e 7
25. Cola Company has call options on its common stock traded in the market. The options have an
exercise price of $45 and expire in 156 days. The current price of the Cola stock is $44.375. The
risk-free rate is $7% per year and the standard deviation of the stock returns is 0.31. Calculate the value
of d2: (approximately)
A) +0.0227
B) -0.0227
C) +0.2027
D) -0.2027
Answer: B Type: Medium Page: 576
Response: d2 = d1 - [(σ )(SQRT( t)]; d2 = 0.18 (0.31)[ (156/365)^0.5] = -0.0227
26. If the value of d1 is 1.25, then the value of N(d1) is equal to:
A) -0.1056
B) 1.25
C) 0.25
D) 0.844
Answer: D Type: Medium Page: 578
Response: Use the Cumulative Probabilities of the Standard Normal Distribution Table
27. If the value of d2 is -0.5, then the value of N(d2) is:
A) -0.1915
B) 0.6915
C) 0.3085
D) 0.8085
Answer: C Type: Medium Page: 578
Response: Use the Cumulative Probabilities of the Standard Normal Distribution Table
28. If the value of d is –0.75, calculate the value of N(d):
A) 0.2266
B) –0.2266
C) 0.7734
D) –0.2734
Answer: A Type: Medium Page: 578
29. If the strike price increases then the: [Assume everything else remaining the same]
A) Value of the put option increases and that of the call option decreases
B) Value of the put option decreases and that of the call option increases
C) Value of both the put option and the call option increases
D) Value of both the put option and the call option decreases
E)None of the above
Answer: A Type: Medium Page: 578
8. Test Bank, Chapter 218
30. If the volatility (variance) of the underlying stock increases then the: [Assume everything else
remaining the same]
A) Value of the put option increases and that of the call option decreases
B) Value of the put option decreases and that of the call option increases
C) Value of both the put option and the call option increases
D) Value of both the put option and the call option decreases
E)None of the above
Answer: C Type: Medium Page: 578
31. The Black-Scholes OPM is dependent on which five parameters?
A) Stock price, exercise price, risk free rate, beta, and time to maturity
B) Stock price, risk free rate, beta, time to maturity, and variance
C) Stock price, risk free rate, probability, variance and exercise price
D) Stock price, exercise price, risk free rate, variance and time to maturity
Answer: D Type: Difficult Page: 578
32. The value of N(d) in the Black-Scholes model can take any value between:
A) –1 and + 1
B) 0 and +1
C) –1 and 0
D) None of the above
Answer: B Type: Medium Page: 578
33. N(d1) in the Black-Scholes model represents
(I) call option delta
(II) hedge ratio
(III) probability
A) I only
B) II only
C) III only
D) I, II, and III
Answer: D Type: Medium Page: 578
34. The term [N(d2)*PV(EX)] in the Black-Scholes model represents:
A) call option delta
B) bank loan
C) put option delta
D) none of the above
Answer: B Type: Medium Page: 578
9. Brealey/Myers/Allen, Principles of Corporate Finance, 8/e 9
35. Which of the following statements regarding American puts is/are true?
A) An American put can be exercised any time before expiration
B) An American put is always more valuable than an equivalent European put
C) Multi-period binomial model can be used to value an American put
D) All of the above
Answer: D Type: Medium Page: 582
36. A stock is currently selling for $50. The stock price could go up by 10% or fall by 5% each
month. The monthly interest rate is 1% (periodic rate). Calculate the price of an American put option
on the stock with an exercise price of $55 and a maturity of two months. (Use the two-stage binomial
method)
A) $5.10
B) $3.96
C) $4.78
D) None of the above
Answer: A Type: Difficult Page: 582
Response: p=1-(-5)/(10-(-5)) = 0.40 1-p = 0.6
End of one month values: [(0)(0.4) + (2.75)(.6)]/1.01= 1.6337 or zero
And [(2.75)(.4)+(9.875)(0.6)]/1.01 = $6.9555 or $7.5 if exercised;
P = [0.4(1.6337) +(7.5)(0.6)]/1.01 = $5.10
37. Suppose the exchange rate between US dollars and British pound is US$1.50 = BP1.00. If the
interest rate is 6% per year what is the adjusted price of the British pound when valuing a foreign
currency option with an expiration of one year? (Approximately)
A) $1.905
B) $1.4151
C) $0.7067
D) None of the above
Answer: B Type: Difficult Page: 583
Response: Adjusted price = 1.5/1.06 = 1.4151
38. If the interest rate is 10%, the upside change is +25% and the downside change is –20%.
Calculate the risk-neutral probability of upside change.
A) 0.5
B) 0.6667
C) 0.75
D) None of the above.
Answer: B Type: Difficult Page: 584
Response: p = 10-(-20)/(25-(-20)) = 0.6667
10. Test Bank, Chapter 2110
39. If the interest is 8%, the upside change is +40% and the downside change is –40% calculate the
risk-neutral probability of upside change.
A) 0.50
B) 0.80
C) 0.60
D) None of the above.
Answer: C Type: Difficult Page: 584
Response: p= 8-(-40)/(40-(-40)) = 0.6
40. If the interest rate is 12%, the upside change is 20% and the downside change is –10%, calculate
the risk-neutral probability of upside change.
A) 0.733
B) 0.5
C) 0.1
D) None of the above.
Answer: A Type: Difficult Page: 584
Response: p=12-(-10)/(20-(-10)) = 0.7333
41. A stock is currently selling for $100. One year from today the stock price could go up by 30% or
go down by 20%. The risk-free interest rate is 10%[APR]. Calculate the price of a one-year
European call option on the stock with an exercise price of $100 using the binomial method.
A) $30.00
B) $16.36
C) $15.67
D) None of the above.
Answer: B Type: Difficult Page: 584
Response: p=10-(-20)/(30-(-20)) = 0.60; C = [(0.6)(30)-(.4)(0)]/1.1 = $16.36
42. A stock is currently selling for $50. One month from today the stock price could go up by 10% or
fall by 50%. If the monthly interest rate is 1% (periodic rate) calculate the price of a European call
option on the stock with an exercise price of $48 and a maturity of one month (use the binomial method).
A) $2.77
B) $2.00
C) $1.98
D) None of the above.
Answer: A Type: Difficult Page: 584
Response: p = [1-(-5)]/(10-(-5)) = 0.40; C = [(0.4)(7) + (0.6)(0)]/1.01 = $2.77
11. Brealey/Myers/Allen, Principles of Corporate Finance, 8/e 11
43. A stock is currently selling for $50. The stock price could go up by 10% or fall by 5% each
month. The monthly interest rate is 1% (periodic rate). Calculate the price of a European call option on
the stock with an exercise price of $48 and a maturity of two months. (use the two-stage binomial
method)
A) $3.96
B) $2.77
C) $1.98
D) None of the above.
Answer: A Type: Difficult Page: 584
Response: p=1-(-5)/(10-(-5)) = 0.40 1-p = 0.6
End of one month values: [12.5(0.4) + (4.25)(.6)]/1.01= 7.4752
And [(4.25)(.4)+ (0.6)(0)]/1.01 = $1.6832; C = [0.4(7.4752) + (0.6)(1.6832)]/1.01 = $3.96
44. A stock is currently selling for $50. The stock price could go up by 10% or fall by 5% each
month. The monthly interest rate is 1% (periodic rate). Calculate the price of a American put option
on the stock with an exercise price of $55 and a maturity of two months. (Use the two-stage binomial
method)
A) $5.10
B) $3.96
C) $4.78
D) None of the above.
Answer: A Type: Difficult Page: 584
Response: p=1-(-5)/(10-(-5)) = 0.40 1-p = 0.6
End of one month values: [(0)(0.4) + (2.75)(.6)]/1.01= 1.6337 or zero
And [(2.75)(.4)+(9.875)(0.6)]/1.01 = $6.9555 or $7.5 if exercised;
P = [0.4(1.6337) +(7.5)(0.6)]/1.01 = $5.10
45. A stock is currently selling for $50. The stock price could go up by 10% or fall by 5% each
month. The monthly interest rate is 1% (periodic rate). Calculate the price of a European put option on
the stock with an exercise price of $55 and a maturity of two months. (use the two-stage binomial
method)
A) $5.10
B) $2.77
C) $4.78
D) None of the above.
Answer: C Type: Difficult Page: 584
Response: p=1-(-5)/(10-(-5)) = 0.40 1-p = 0.6
End of one month values: [(0)(0.4) + (2.75)(.6)]/1.01= 1.6337 or zero
And [(2.75)(.4)+(9.875)(0.6)]/1.01 = $6.9555 or $7.5 if exercised ;
P = [0.4(1.6337) +(6.9555)(0.6)]/1.01 = $4.78
True/False Questions
T F 46. An option can be valued using the standard discounted cash flow procedure.
Answer: False Type: Medium Page: 565
13. Brealey/Myers/Allen, Principles of Corporate Finance, 8/e 13
T F 47. It is possible to replicate an investment in a call option by a levered investment in the
underlying asset.
Answer: True Type: Medium Page: 566
T F 48. When risk-neutral probabilities are used, the cost of capital is the discount rate
Answer: False Type: Medium Page: 567
T F 49. Option delta for a put option is always positive
Answer: False Type: Difficult Page: 569
T F 50. For an European option: Value of put = Value of call) - share price + PV(exercise price)
Answer: True Type: Medium Page: 570
T F 51. The binomial model is a discrete time model
Answer: True Type: Medium Page: 570
T F 52. The Black-Scholes model is a discrete time model
Answer: False Type: Medium Page: 575
T F 53. N(d1) and N(d2) are probabilities and therefore take values between 0 and 1.
Answer: True Type: Medium Page: 578
T F 54. Multi-period binomial model can be used to evaluate an American put option
Answer: True Type: Medium Page: 582
Essay Questions
55. Briefly explain why discounted cash flow method (DCF) does not work for valuing options?
Type: Difficult Page: 565
Answer:
Discounted cash flow method has two steps. First, estimating cash flows; second, discounting these cash
flows using an appropriate opportunity cost of capital. In case of options, the first part is quite difficult.
But the second step is almost impossible as the risk of an option changes with changes in stock price.
Also, the risk changes over time even without a change in the stock price.
14. Test Bank, Chapter 2114
56. Briefly explain why an option is always riskier than the underlying stock?
Type: Difficult Page: 566
Answer:
An investment in option can be replicated by borrowing a fraction of the cost of the stock at the risk-free
rate and investing in the stock. Therefore, investing in an option is always riskier than investing only in
the stock. The beta and the standard deviation of returns of an option is always higher than that of
investing in the underlying stock
57. Briefly explain risk-neutral valuation in the context of option valuation.
Type: Difficult Page: 567
Answer:
The valuation method that uses risk-neutral probabilities to evaluate the current price of an option is
known as risk-neutral valuation. The risk-neutral upside probability is calculated as:
p = [risk-free rate – downside change]/[upside change – downside change]
58. Briefly explain what is meant by risk-neutral probability?
Type: Difficult Page: 567
Answer:
Risk-neutral probability provides certainty equivalent expected payoffs. It assumes that the investor does
not need a higher rate of return to invest in a risky asset. The present value of the payoffs are obtained by
discounting at the risk-free rate of return.
59. Briefly explain the term "option delta."
Type: Medium Page: 567
Answer:
Option delta is the ratio of spread of possible option prices to spread of possible share prices. This is also
the hedge ratio.
60. Give an example of an option equivalent investment using common stock and borrowing.
Type: Difficult Page: 567
Answer:
The current price of a stock is $40. Stock price, one period from today, could be either $50 or $30. The
exercise price is also $40. The risk-free rate per period is 2%. The option payoff is $10 in the up state
and is zero in the down state. By borrowing $14.74 today and buying 0.5 of a share of stock, one can
replicate the payoffs from the option. The payoff in the upstate is, the value of the stock $25 minus the
payoff amount of the loan $15, equal to $10. The payoff in the downstate is, the value of the stock is
$15 minus the payoff amount of $15, equal to zero. This is called a replicating portfolio.
61. Briefly explain put-call parity.
Type: Medium Page: 570
Answer:
The relationship between the value of an European option and the value of our equivalent put option is
called put-call parity. If this does not hold, then investors have arbitrage opportunity.
15. Brealey/Myers/Allen, Principles of Corporate Finance, 8/e 15
62. Briefly explain how to choose the up and down values for the binomial method?
Type: Medium Page: 574
Answer:
[1 + upside change] = eó (SQRT (h)) and [1 + downside change] = 1/[1 + upside change]
Where: ó = standard deviation of the annual returns of the underlying stock. h = time to expiration
expressed in years.