Finance questions and answers in June 2021

Rod Block and Brett Allisier are bond traders at a large fixed-income investment firm. Both Block and Allisier have developed bond valuation models for bonds with embedded options. Using their respect...
Assume an individual makes a lump sum investment at the beginning of year one of $2,123. The expected return on this investment received at the end of year 8 is $4,398. What is the IRR of the investme...
Assume a corporation has just paid a dividend of $ 4.35 per share. The dividend is expected to grow at a rate of 3.8% per year forever, and the discount rate is 9.1%. What should be the amount paid as...
An Indian company had taken a long-term loan in JPY at 0.10%. Repayment scheduled after six months. Indian company is planning to pay this JPY loan from its USD account. USD/JPY is current quoted in s...
After studying Iris Hamson's credit analysis, George Davies is considering whether he can increase the holding period return on Yucatan Resort's excess cash holdings (which are held in pesos) by inves...
  A rise in the index of Leading Economic Indicators can be a predictor of all EXCEPT: Question 5 options: Rising interest rates Rising stock market Expanding economy More favorable mortgage rates in...
The following situations test your comprehension of time value of money concepts. You will need your financial calculator or Excel . For each problem write the variable from the problem next to the va...
Can someone explain this to me in detail? Bangkok​ Instruments, Ltd., the Thai subsidiary of a U.S.​corporation, is a seismic instrument manufacturer. Bangkok Instruments manufactures the instrume...
You are provided with income statements (I/S) and balance sheets (B/S) for your company for the three most recent fiscal years. You are able to calculate, from these statements, I/S line items as a pe...
Can someone explain this to me in detail? Bangkok​ Instruments, Ltd., the Thai subsidiary of a U.S.​corporation, is a seismic instrument manufacturer. Bangkok Instruments manufactures the instrume...
Can someone help explain this? An essay question was posed asking- We fear a revaluation of the currency of our affiliate the S. African rand. 1) How do i explain how we should hedge our translation ...
Can someone explain this to me in detail? Bangkok​ Instruments, Ltd., the Thai subsidiary of a U.S.​corporation, is a seismic instrument manufacturer. Bangkok Instruments manufactures the instrume...
The American Opportunity Credit is characterized by all of the following EXCEPT: Question 5 options: a. The maximum annual credit amount is $2,500 per student in 2015 b. There is no requirement that t...
Michelle, a sophomore at the local university at the beginning of 2015, paid $3,000 towards her tuition from her own savings. Her parents will not claim her as a dependent on their 2015 tax return, bu...
Chad obtained a student loan of $8,000 to pay for his college expenses. He paid $5,000 for tuition and the rest for his room and board. On the federal income tax return, he may deduct the interest onl...
Jodie's grandparents contributed $150,000 to a 529 plan for her benefit in 2015. If they choose the split gift option, they may exclude $140,000 for gift tax purposes this year, and only $10,000 will ...
Simplified College Cost Worksheet Calculate approximate monthly amount to invest  at the beginning of the period . Round the final answer to two decimals.  Please note that intermediate steps should...
Mark and Jane spent $10,000 each for the tuition expenses of their 3 children in college. They can claim a Lifetime Learning Credit for $30,000 of combined educational expenses. Not sure if this is tr...
According to the article below answer the following question: Explain one (1) plausible benefit that Myanmar obtain from the investment made by Sumitomo. How about the investment made by and Toyota? ...
Explain the International Fisher effect and Interest Rate Parity. If these parity exists, explain the justification for MNCs to invest excess cash in foreign country. Provide examples in which situati...
According to the article below answer the following question: Explain two (2) plausible motives for Daiwa Securities to establish a subsidiary in Myanmar. [10 marks] Article: Myanmar coup fails to de...
According to the article below answer the following question: Explain the two (2) possible reasons for Kirin to engage in a joint venture when investing directly in Myanmar. [5 marks] Article: Myanma...
According to the article below answer the following question: The news article mentions three factors that explain ringgit's appreciation against the U.S. dollar namely, the weaker U.S. dollar, the hi...
NAB.AX is trading at $26 with a volatility of 25 percent. Consider a call option on this stock with an exercise price of $26 and an expiration in 90 days. The risk-free rate is 1.5 percent. Assume the...
Gail has purchased a life insurance policy on her husband Phil's life. The policy will pay a lump sum benefit to her daughter, Bonita, when Phil passes away. If Gail passes away prior to Phil, the own...
Jimmy was self-employed but is now retired. The government benefits that Jimmy receives form the majority of his modest income. Which of the following benefits that Jimmy receives is non-taxable and i...
Benny applies and is approved for a whole life insurance policy through Grateful Life Insurance company. One week after paying his first premium and taking delivery of the policy, Benny decides that h...
When completing the application for his life insurance policy with his agent, Blarney accidentally provides the wrong year of birth on the application. Three years later, the agent and the insurer dis...
Camilla uses email to communicate with clients and often sends out marketing material to her existing clients and prospects. Which of the following statements about the legislation that governs Camill...
Malena meets with you to discuss her insurance and estate plans. She has been married to Alberto for 10 years, but is considering divorce. Both Malena and Alberto had their wills drawn up 5 years ago,...
Blythe is an insurance agent and her new client, Xavier, wants to purchase a deferred annuity within his registered retirement savings plan (RRSP). The principal amount deposited to the annuity is $75...
Norm purchased an accidental death and dismemberment (AD&D) policy through Brightlight Insurance Co. Norm named his son Matthew as the beneficiary of the policy. As a result of an accident, Norm l...
Consider two investors: Investor-1 (henceforth Inv-1) and Investor-2 (henceforth Inv-2). Risk-free rate for Inv-1 is 5%. Return on risky portfolio is 12%. Inv-1 invests $20,000 in risk-free asset and ...
What is the difference between a swap and a forward contract? A. The size of a forward contract is often greater than that of a swap B. A forward contract is one-time transaction. A swap involves a se...
NOTE: Please refer to the terms Code and Standards in this section refers to the CFA Institute Code of Ethics and / or the CFAInstitute Standards of Professional Conduct. Given the informatio...
What is swap pricing? A.To find the fixed rate that makes the value of the swap zero at swap initiation. B.To compute the DCF value of an existing swap contract. C.To find the spread over a particular...
What is swap valuation? A.Find the fixed rate so that the value of the swap is zero at swap initiation. B.Find the current fixed rate of a swap that is similar to the existing swap. C.Find the DCF val...
You work at a mine site that has two gyratory crushers to process run-of-mine ore from the open pit. They are on a staggered schedule for planned major maintenance, and replacement as necessary. One o...
Can someone please check my work and let me know if the mathematical part is correct? We are Bechtel, a private US construction firm. We bid to develop the airport and the surrounding area for Thailan...
Please write in essay format and elaborate. The evidence is that practitioners do not hedge 100% of the time. They hedge about 70% and their great preference is the forward market . Elaborate on the i...
Use a financial calculator or computer software program to answer the following questions:   a)   Melanie is trying to save money for retirement and has a future goal of $750,000 at the end of 20 ...
2. Dan is considering borrowing $375,000 to purchase a new condo. Based on that information, answer the following questions. Show all work.   a)   Calculate the monthly payment needed to amortize ...
Please use the Forward contract or options approach when solving the problem for problem A. The problem has 2 parts, part A and B. Thank you so much A.) We have 100 million South African rand that is ...
We have 100 million South African rand that is payable in one year (we have to pay it to a South African company.) Assume the spot exchange rate is 10.05 rand equal one US dollar. Also, assume that th...
Would anyone be able to help explain this? There is a difference among a definite transaction and a contingent transaction exposure. Elucidate and include in your analysis whether the hedging tools ar...
Assumptions to consider: • $10 million cash purchase • Building generates additional net profits after tax of $1.25 million per year • 20 year expected useful life of building • Salvage value:...
A stock price is currently $80. Over each of the next two six-month periods, it is expected to go up by 6% or down by 6%. The risk-free interest rate is 5% per year with semi-annual compounding.  Pa...
Question: A stock price is currently $80. Over each of the next two six-month periods, it is expected to go up by 6% or down by 6%.  The risk-free interest rate is 5% per year with semi-annual compo...
Can you help explain how to answer this question step by step? We have 100 million South African rand that is payable in one year (we have to pay it to a South African company.) Assume the spot exchan...
A stock price is currently $80. Over each of the next two six-month periods, it is expected to go up by 6% or down by 6%. The risk-free interest rate is 5% per year with semi-annual compounding.  Pa...
Part I. As a pension fund manager, you anticipate that you have to pay out 8 percent on $100 million for the next eight years. The payment is made semi-annually. You currently hold $100 million of flo...
Topic: Retirement Planning and Employees Provident Fund(EPF) QUESTION 4 (25 MARKS)    (a) Read the following information and answer the question.         -------------------------------------...
A stock price is currently $80. Over each of the next two six-month periods, it is expected to go up by 6% or down by 6%. The risk-free interest rate is 5% per year with semi-annual compounding.  Pa...
A hedge fund is currently engaged in a plain vanilla interest rate swap with a company named NeverDown. Under the terms of the swap, the hedge fund receives six-month LIBOR and pay 8 percent per annum...
Question: A stock price is currently $80. Over each of the next two six-month periods, it is expected to go up by 6% or down by 6%. The risk-free interest rate is 5% per year with semi-annual compoun...
Q. Abbie purchased an apartment on 1 March 2005, for $300,000, and paid stamp duty of $15,000. She moved into it immediately. On 1 March 2015, Abbie bought herself a house. She immediately moved into ...
Question: A hedge fund is currently engaged in a plain vanilla interest rate swap with a company named NeverDown. Under the terms of the swap, the hedge fund receives six-month LIBOR and pay 8 percent...
1) Misty would like to invest $10,000 today. She is faced with the choice between 2 investments: Option 1: invest $10,000 today for 5 years; Option 2: invest $10,000 today for 1 year and reinvest pro...
  Calculate the value of a bond that matures in 14 years and has a $1,000 par value. The annual coupon interest rate is 14 percent and the​ market's required yield to maturity on a​ comparable...
!Jason received a 15 year loan of $350,000 to purchase a house. The interest rate on the loan was 5.90% compounded semi-annually. a. What is the size of the monthly loan payment? Round to the nearest ...
"Four Cs of credit analysis" is used by analysts to evaluate creditworthiness. For each of the following scenarios, which of the "Four Cs" should be used for evaluation? Please also explain your answe...
A 20-year, $1,000 par value bond has a 9% semi-annual coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will the price be 6 years from now?  a.$935...
[There are 8 things to answer below, but the question will be worth 5 marks in total] A trader establishes an option-trading strategy as follows: One long put option with a strike price of $70, which ...
You are a loan officer working at Syfield Mortgage Corp. A client, named Sara Wilson, has come to you to see if she how much she is qualified for a mortgage loan After sitting down with her, you came ...
A supplier of Unlimited Sunshine Limited is offering the opportunity to purchase key raw material on credit terms of net 30 days from the invoice date with a 2.5% cash discount if paid within 4 days. ...
1.     Your objective is an annuity due paying $5,000 semi-annually for 5½ years at 4% compounded quarterly. How far in advance of this would you need to invest $20,000 at 6.82% compounded month...
On April 7th, 2020, Fitch Ratings Inc. downgrades Australia's four biggest banks credit ratings. How does this affect borrowers, lenders, and financial institutions ? What are the implications of this...
Helania is a small country in Eastern Europe with a hard peg currency system that uses the euro. The country is undergoing a string of financial deregulations and is considering adopting a new FX syst...
Expected return and standard deviation of a risky portfolio are 11% and 21% respectively. Risk-free rate is 5%. Mr. Yen constructed a complete portfolio with these two assets that maximises his utilit...
Owen's parents, who are retired, have gifted Owen $2,500 every December since Ellie's birth in 2015, which Owen then immediately contributed to an RESP for Ellie before year-end. i. For tax purposes, ...
You work for firm ABC situated in Australia, and your boss has become concerned about the current economic environment, especially as it is related to the different types of exposures that your firm m...
Please help !. o The couple has a line of credit to cover unexpected expenses. The maximum possible withdrawal is $15,000. Terms include a monthly principal repayment of 2% of the balance outstanding,...
Please help Q2 and Q3. Question 2 Sylvia is planning an investment. Her annual combined Federal and provincial marginal tax rate is 32%. If she invests $1,000 every year for 3 years starting today, ho...
The couple's mortgage is coming up for renewal. They borrowed $289,750 five years ago at a rate of 2.59%, compounded semi-annually. Their financial institution has offered them a renewal rate of 1.6...
The couple has a line of credit to cover unexpected expenses. The maximum possible withdrawal is $15,000. Terms include a monthly principal repayment of 2% of the balance outstanding, and an interes...
Aisha's gross income is $80,000 a year. She just purchased her first home with a 25-year amortization period and a 2.9%, compounded semi-annually, mortgage rate locked in for a 5-year term. Her paym...
Sylvia is planning an investment. Her annual combined Federal and provincial marginal tax rate is 32%.  If she invests $1,000 every year for 3 years starting today, how much after-tax income will sh...
,A fund manager has been monitoring the performance of Virgin Galactic Corporation shares (NYSE: SPCE). The shares are currently trading at $34.8 on the New York stock exchange. The fund manager predi...
Can someone help explain this & illustrate it step by step? (English is my preferred language for the explanation) One US $ buys 50 West African francs, now. In one year, it buys 80 W. African fra...
Attached is 3 MCQ questions - the answer to each is appreciated. Not concerned about working out just trying to compare my answer. Q1) A project has an initial cost of $1,000,000 and is expected to la...
You work for firm ABC situated in Australia, and your boss has become concerned about the current economic environment, especially as it is related to the different types of exposures that your firm m...
In the Black-Scholes option pricing formula, an increase in a stock's volatility Decreases the associated put option value Does not change either the put or call option value because put-call parity h...
Consider a European call option and a European put option, written on the same underlying asset. Both options have the same strike price and the same maturity date. What does the put-call parity imply...
Which of the following are NOT true? Dividend changes follow shifts in long-term, sustainable earnings. Repurchases are generally tax advantaged relative to dividends. Firms seem to have long-run targ...
Consider a European call option for 100 shares of IBM Corporation, whose strike price is $170 per share and which matures 18 months from now. What does this option entitle you to do? Between now and 1...
Dr. Fauci is worried about his job. Once the pandemic is over, he won't get the same media exposure and starts thinking about how he can make more money. Thus, he thinks of starting a new set of bars...
Q3( C)      Suppose that the forward ask price for March 20 on euros is $0.9127 and at the same time the price of IMM euro futures for delivery on March 20 is $0.9145. How could an arbitrageur pr...
You can't decide if you want to become an actual influencer or if you want to do it Denzel "Training Day" style train other people how to be influencers. Unfortunately, you only have time to do one. (...
You figure since there are 8,800 cryptocurrencies now - more than actual fiat currencies (180) or more than the number of companies listed on the US stock market (3,900) - why not start your own and t...
You see the price of TSLA stock is $687 a share. You aren't sure if you should give your money to the "Technoking of Tesla" and the "Master of Coin" so you try to figure out Tesla stock price. You see...
What is the lower bound of an American call option with 8 months to expiry and a strike price of 8. The underlying stock is currently trading at 14.8, and the risk-free rate is 10%.   Do not enter th...
LOL Ltd has a current share price of $52. A put option written on LOL, which has a strike price has $55 and 8 months to expiry, is trading at $5.34.   If the riskfree rate of interest is 7% pa (conti...