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Finance
(4 points) A 13-year 3.4% bond with a face value of $180,000 is issued on November 21, 2020. It can be redeemed (at the discretion of the issuer) on any coupon date in 2028, 2029, 2030 or on maturity on November 21, 2033.
a) Find how much an investor should pay for the bond on the date it is issued in order to have a minimum yield of 3%
a) Find how much an investor should pay for the bond on the date it is issued in order to have a minimum yield of 3%
Finance
How will you promote the brand Yuva online? Suggest minimum five online platforms through which you will promote the brand and increase the sale. (10 Marks)
Finance
Q. 2 (Binomial model gymnastics, 25 pts). Consider an N -period binomial model with up factor u, down factor d, risk-free return r, and probability p ∈ (0, 1) of up. Assume that the principle of no-arbitrage holds in this model. For each n ∈ {0, . . . , N }, let Sn be the stock price at time n.
a. (10) Calculate the expected value of Sn.
b. (10) Find the distribution of log(Sn).
c. (5) What are the expected value and variance of log(Sn)?
a. (10) Calculate the expected value of Sn.
b. (10) Find the distribution of log(Sn).
c. (5) What are the expected value and variance of log(Sn)?
Finance
9. You form a portfolio by combining shares of stocks for two different companies. The companies have different expected returns, and different risks. Which statement is true for all of the possible portfolios that contain shares in both companies? (NOTE: Choices below might be incorrect because they always are false, whereas others might be incorrect because they are sometimes true and sometimes false. Only the correct choice is always true.)?
a. The return for the portfolio is less than the return of the highest return stock.
b. The risk for the portfolio lies between the risks of the component stocks.
c. The risk for the portfolio is less than the risk of the least risky stock.
d. a and b
e. a and c
a. The return for the portfolio is less than the return of the highest return stock.
b. The risk for the portfolio lies between the risks of the component stocks.
c. The risk for the portfolio is less than the risk of the least risky stock.
d. a and b
e. a and c
Finance
12. Which of the following firms has the smallest beta?
a. Abercrombie & Fitch (Apparel)
b. Vale (commodity/mining)
c. Wal-Mart (discount retail store)
d. Pfizer (Pharmaceutical)
e. Apple (Tech)
a. Abercrombie & Fitch (Apparel)
b. Vale (commodity/mining)
c. Wal-Mart (discount retail store)
d. Pfizer (Pharmaceutical)
e. Apple (Tech)
Finance
13. Which one of the following activities in Pepsi would increase its beta?
a. To reduce cost Pepsi will terminate contract with BottlerLeb and to produce plastic bottles in-house
b. Enter into a joint venture with a labor company to provide workers when needed
c. Contract with a labeling company to add colors and labels on produced bottles and cans
d. Contract with Allo Taxi to transport their products to retailers
e. None of the above
a. To reduce cost Pepsi will terminate contract with BottlerLeb and to produce plastic bottles in-house
b. Enter into a joint venture with a labor company to provide workers when needed
c. Contract with a labeling company to add colors and labels on produced bottles and cans
d. Contract with Allo Taxi to transport their products to retailers
e. None of the above
Finance
If the beta of the market index is 1.0 and the standard deviation of the market index increases from 12% to 18%, what is the new beta of the market index?
a. 0.33
b. 0.67
c. 1.4
d. 1
e. 1.33
Finance
Explain the organizational structure of investment banks
Finance
ABC Pvt. Ltd. is considering two mutually exclusive capital investments. The project’s expected net cash flows are as follows:
Expected Cash Flows
Year Project A Project B
0 -375 -575
1 -300 190
2 -200 190
3 -100 190
4 600 190
5 600 190
6 926 190
7 -200 0
If you were told that each project’s cost of capital was 12%, which project should be selected using the NPV criteria? What is each project’s IRR? What is the regular payback period for these two projects? What is the profitability index for each project if the cost of capital is 12%?
Expected Cash Flows
Year Project A Project B
0 -375 -575
1 -300 190
2 -200 190
3 -100 190
4 600 190
5 600 190
6 926 190
7 -200 0
If you were told that each project’s cost of capital was 12%, which project should be selected using the NPV criteria? What is each project’s IRR? What is the regular payback period for these two projects? What is the profitability index for each project if the cost of capital is 12%?
Finance
Assume that your father is now 50 years old and plans to retire after 10 years from now. He is expected to live for another 25 years after retirement. He wants a fixed retirement income of Rs. 5,00,000 per annum. His retirement income will begin the day he retires, 10 years from today, and then he will get 24 additional payments annually. Your father has current savings of Rs. 10,00,000 and he expects to earn a return on his savings @ 10% p.a., annually compounding. How much (to the nearest of rupee) must your father save during each of next 10 years to meet his retirement goal?
