1. You are a financial analyst and one of your clients has just advised you that they intend to retire
1. You are a financial analyst and one of your clients has just advised you that they intend to retire 25 years from today. After a thorough analysis of your client’s needs, you determine that a sum of $1,050,000 will be required to meet her financial needs when she retires. Your client would like to start making quarterly contributions to a retirement savings plan (the first contribution will be 3 months from today) and continue those payments until she retires. If you can invest her contributions at an effective annual rate of return of 8%, how much will your client’s quarterly payment need to be?The answer is 3487.73 but please show working out steps
1. Instruction:The following two documents for the Namibian banking industry are provided to you:i. Aggregated Balance Sheet (BIR 100)and ii.
1. Instruction:The following two documents for the Namibian banking industry are provided to you:i. Aggregated Balance Sheet (BIR 100)and ii. Aggregated Income Statement (BIR 201) Required:Using the above two documents, analyse the Namibian banking sector by calculating (show your calculations) and interpreting the following ratios for the third and fourth quarter of 2019: 1 .Total Risk Weighted Capital Ratio2 .Non-Performing loans ratio 3 .Return on Equity 4 .Return on Assets 5 .Total Loans/Total Deposits
A trader takes a simultaneous short position in the following options 1) a call option with a strike price of
A trader takes a simultaneous short position in the following options 1) a call option with a strike price of $50 and premium of $3 2) a put option with a strike price of $40 and premium of $4. For what range of prices of the underlying asset does the trader make a profit? Draw the profit and payoff diagrams to illustrate.What might be the trader’s view of the underlying asset price for taking these positions?
a. Computethe price of a European call option using the two period binomial model assuming the following data:S0 = 10,
a. Computethe price of a European call option using the two period binomial model assuming the following data:S0 = 10, T = 2 months, u = 1.5, d = 0.5, r = 0.05, K = 7, D=0. b.If the call option were selling at $4, what would you do to create riskless arbitrage strategy? Explain how the strategy is maintained over the two binomial periods assuming the underlying asset price declines in the first period. Construct a table to demonstrate the exact strategy and the cashflows from the strategy. c.Now suppose the option is American. Verify that early exercise of the American call is not optimal. Show all calculations.
Wesfarmers Limited (WES) is an Australian company with diverse holdings, includingretail, industry, etc.. It is Australia’s largest private employer. Currently
Finance Assignment Writing ServiceWesfarmers Limited (WES) is an Australian company with diverse holdings, includingretail, industry, etc.. It is Australia’s largest private employer. Currently (i.e., t = 0),WES shares are trading at $48.17.You wish to purchase a European put on WES shares, with strike price $50.00, expiringafter two time steps. Consider a two-step binomial model, with variable returns:R(0, 0) = 1.035 , R(1, 1) = 1.025 and R(1, 0) = 1.045 . Using crr notation, assumeu = 1.14 and d = 1/u .(a) Calculate the risk neutral probabilities π(0, 0), π(1, 1) and π(1, 0). (If you wish,you may present these results in a binomial pricing tree).(b) Construct a two-step binomial pricing tree for the European put.(c) A European call has the same strike price, underlying asset and time to expiry asthe European put. Construct a two-step binomial pricing tree for the Europeancall.(d) Construct the two-step binomial pricing tree for the present value of the strike,that is, find all pv(n,j)(K) in the two-step model. When we have variable interestrates, the present values of the strike at different nodes can be calculated usingthe generalised binomial pricing formula,pv(n,j)(K) = 1R(n, j)[π(n, j)pv(n 1,j 1)(K) (1 − π(n, j))pv(n 1,j)(K)] , (1)with the present value at expiry N = 2 equal to the strike, pv(2,j)(K) = K for allj = 0, 1, 2.(e) Put-call parity still holds when interest rates are variable,C(n, j) − P(n, j) − S(n, j) pv(n,j)(K) = 0 .Show that put-call parity holds for your values of the put, the call, and the presentvalue of the strike, at every node of the two-step binomial model.(f) Given that λ(0, 0) = 1 , calculate all state prices at the put’s expiry, λ(2, 2) ,λ(2, 1) and λ(2, 0). Remember that when when interest rates are variable, youcannot write the state prices directly, rather you should calculate them iteratively.Use the state prices λ(2, j) with j = 0, 1, 2 to calculate the premium of theEuropean put and confirm that it agrees with the premium obtained from thebinomial pricing tree in part (b).
Section 2- Equity Analysis FSA Company’s Forecasted Financial Data (In billions) 2020 2021 2022 2023 2024 Net income 1.64 1.69
Section 2- Equity Analysis FSA Company’s Forecasted Financial Data (In billions) 2020 2021 2022 2023 2024 Net income 1.64 1.69 1.74 1.79 1.84 Year end Book Value of equity 5.58 5.64 5.70 5.75 5.81 a. Explain what is an accounting based equity valuation model. Using the data given above, estimate FSA’s value at the beginning of year 2020. Assume that the abnormal earnings are expected to be zero after year 2024. Use the accounting based equity valuation model.
-PDI Ltd has recently restructured its outstanding bond issue. The bond issue has 8 years remaining to maturity and
-PDI Ltd has recently restructured its outstanding bond issue. The bond issue has 8 years remaining to maturity and a coupon rate of 10% per annum, with coupons being paid semi- annually. The new arrangement allows the firm to make no coupon payments for the next 5 years. After that period, normal semi-annual coupon payments will resume. At maturity, the face value of $1,000 per bond plus all the deferred (that is, unpaiD. coupons will be paid. If the required rate of return on these bonds is 15% per annum, the current market price of PDI Ltd’s bonds should be closest to -Trusty gets’ Lucky Ltd., just paid a dividend of $2.00 per share. The managing director just announced that it is planned to increase dividends at a rate of 6% indefinitely. An appropriate discount rate for this company is 16% per annum. What is the firm’s expected value in one year? -Sarah is planning to purchase a new house. To purchase the house, she will need to borrow $550,000 from the bank. The loan term is 30 years and the terms of the contract require monthly end of period payments (including interest and principle). The current interest rate offered by her bank is 3.5% per annum for a variable rate mortgage loan. If Sarah borrows the money from her bank and the interest rate decreases by 0.5% three years after the mortgage started, what would the new monthly repayment be? -A cash-strapped young professional offers to buy your old company car with four equal annual payments of $6,000 beginning two years from today. Assuming you’re indifferent to cash versus credit, that you can invest at 10%, and that you want to receive $12,000 for the car, should you accept and calculate the NPV? Note: NPV are all expressed to the nearest dollar.
Choose the most correct answer to complete the sentence. Units in closed-end funds are unable to be redeemed directly from
Choose the most correct answer to complete the sentence. Units in closed-end funds are unable to be redeemed directly from the fund. Instead, investors must liquidate their holdings in closed-end funds by trading on the secondary market. From the closed-end fund manager’s perspective, all else equal, this reduces lect one:a. leverage of the fundb. return objective of the fundc. liquidity requirements of the fundd. volatility of the underlying portfolio of the funde. risk tolerance of the fund
Which accounting and reporting policies are related to sovereign debts of countries and restructuring of debts. Also solvency and financial
Which accounting and reporting policies are related to sovereign debts of countries and restructuring of debts. Also solvency and financial reporting practices in relation to institutions holding sovereign debt instruments. Which global and accounting policies and disclosures are related to government debt /equity issues with IASB recommendations on the particular issue
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