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15 Sep
2020

Determine which of the following processes are stationary and invertible. In the following we…

Category:ACADEMICIAN

SOLUTION AT Australian Expert Writers

Determine which of the following processes are stationary and invertible. In the following we always assume that ut is white noise with mean zero and variance σ 2 , i.e. ut ∼ WN(0, σ2 ). a) yt = −0.2y(t−1) 0.48y(t−2) ut ; b) yt = −1.9y(t−1) − 0.88y(t−2) ut 1.8u(t−1) 0.81u(t−2); c) yt 1.6y(t−1) = ut − 0.4u(t−1) 0.04u(t−2);d) yt = ut − 10/3u(t−2).
Consider the following scenario then answer the question below. Stock marketFutures marketJanuary KLSE composite index at 1162. Investor expects to
Consider the following scenario then answer the question below. Stock marketFutures marketJanuary KLSE composite index at 1162. Investor expects to purchase a RM10 million stock portfolio in two months’ time.Buys March KLSE CI contracts at 1158.MarchKLSE composite index has risen to 1171, making the acquisition costs of the shares more expensive.Sells March KLSE CI contracts at 1173. a. Explain why the investor has undertaken this particular hedging strategy. (5 marks)b. Assume that the investor wants to cover the full value of their expected investment. How many March KLSE CI futures contracts must they purchase? Assume that the beta factor is 1.25. (7 marks)c. Calculate the profit/loss on the futures transaction. (8 marks)
Jones Corp is considering two different capital structures. It currently has 18,500 shares of stock outstanding. It is considering issuing
Jones Corp is considering two different capital structures. It currently has 18,500 shares of stock outstanding. It is considering issuing $100,000 of debt at an interest rate of 6.3 percent. The break-even level of EBIT between these two capital structure options is $77,000. For this to be true, what is the current stock price? Ignore taxes.
Pretend that it is now January 1, 2009. Mokimoro, Inc. has issued cumulative preferred stock with an annual 10% dividend
Pretend that it is now January 1, 2009. Mokimoro, Inc. has issued cumulative preferred stock with an annual 10% dividend and a par value of $25 per share. They also have common stock outstanding that has historically paid a $0.06 per share dividend. a. How many dollars are expected to be paid out as a preferred stock dividend (per share) in 2009?b. Suppose that next year (2010) that Mokimoro experiences some cash flow problems and for the first time ever, the company decides not to pay their preferred and common stock dividends. One year later, (2011), the firm wishes to pay a $0.07 per share common stock dividend. How much will the company pay to an investor that holds one share of common stock and one share of preferred stock in 2011?c. If the investor is a U.S. individual with a large ownership in Mokimoro, Inc., what percent of the preferred stock dividend will be taxable, according to the U.S. tax code?d. If the investor is a U.S. corporation with a small ownership in Mokimoro, what percent of the preferred stock dividend will be taxable, according to the U.S. tax code?
(Ignore financial distress for this question) Miso Corporation is currently an all-equity firm that has 80,000 shares of stock outstanding
Finance Assignment Writing Service(Ignore financial distress for this question) Miso Corporation is currently an all-equity firm that has 80,000 shares of stock outstanding with a market price of $42 a share. The current cost of equity is 12% and the tax rate is 34%. Miso’s management is considering adding $1 million of debt with a coupon rate of 8% to the capital structure and using the money to repurchase stock. The debt will be sold at par. a. What is your estimate of the new levered value of the firm?b. Now increase the debt used to repurchase stock to $3 million. What is the value of the levered firm now? Why does the value of the firm change, if at all, from your answer to part (a)?c. Compare your answers in parts (a) and (b). What does this say about the optimal capital structure for a firm in a world of taxes (but no financial distress)?
Southern Stone Corp is an all-equity firm. Its total market value is $695,000. The firm has 46,000 shares of stock
Southern Stone Corp is an all-equity firm. Its total market value is $695,000. The firm has 46,000 shares of stock outstanding. The management of the company is considering issuing $146,000 of debt at an interest rate of 8 percent. They will use the proceeds to repurchase shares. Before the debt issue, EBIT will be $60,800. What is the EPS if the debt is issued? Ignore taxes.
Q1a. Should the trader go long or short futures. (3 marks) A trader takes a view that March KLSE CI
Q1a. Should the trader go long or short futures. (3 marks) A trader takes a view that March KLSE CI futures which are currently trading at 1158.60 are about to enter a downtrend.b. Assuming the trader maintains their original position until expiry and the cash settlement price is 1125.40, what will be the profit/loss?. The contract size is RM50/contract. (4 marks)Q2Assume it is now January 1996 and the KLSE composite index is at 1146. The risk-free interest rate is 5% p.a. The weighted average dividend yield of the KLSE composite index is 2.3% p.a. What would be the fair value of the June 2020 KLSE CI futures contract? Maturity is 6 months. (10 marks)Two answer are required. First, assume that the interest is continuous compounding and the second, interest rate is assume non-continuous compounding ( i.e. simple interest).Q3Assume an investor takes a long position in 2 September KLSE CI futures contract on 17th July. The futures contract price is RM1613.00 The initial margin and maintenance margin are RM6,000/contract and RM4,000.00/contract respectively. The trader closes his position on the fifth day. The futures settlement prices during those five days are: Day 1 RM1611.00Day 2 RM1615.00Day 3 RM1620.00Day 4 RM1610.00Day 5 RM1608.00The contract size is RM50/contract. a. Determine the trader’s total gains or losses. (12 marks)b. How much does the trader pay (if any) for “margin call” ? (6 marks)
3 (3 marks): Assume an RMBS tranche has a current CPR of 18%. Derive the SMMR and display the
Question 3 (3 marks): Assume an RMBS tranche has a current CPR of 18%. Derive the SMMR and display the amortisation schedule and bond factor over the next 5 months. The outstanding value in January is also the original value of the pool: Amortisation Schedule Bond Factor 0.0January $500,000,000FebruaryMarchAprilMayJune
Q1 A trader takes a view that March KLSE CI futures which are currently trading at 1158.60 are about to
Q1 A trader takes a view that March KLSE CI futures which are currently trading at 1158.60 are about to enter a downtrend.a. Should the trader go long or short futures. (3 marks)b. Assuming the trader maintains their original position until expiry and the cash settlement price is 1125.40, what will be the profit/loss?. The contract size is RM50/contract. (4 marks)Q2Is it possible to make a gain if the KLSE CI futures price is lower than the theoretical “fair” price given by the cost of holding stock? If so, describe the strategy a trader could use in this situation. (3 marks)Q3Assume an investor takes a long position in 2 September KLSE CI futures contract on 17th July. The futures contract price is RM1613.00 The initial margin and maintenance margin are RM6,000/contract and RM4,000.00/contract respectively. The trader closes his position on the fifth day. The futures settlement prices during those five days are: Day 1 RM1611.00Day 2 RM1615.00Day 3 RM1620.00Day 4 RM1610.00Day 5 RM1608.00The contract size is RM50/contract. a. Determine the trader’s total gains or losses. (12 marks)b. How much does the trader pay (if any) for “margin call” ? (6 marks)Q4Assume it is now January 2020 and the KLSE composite index is at 1146. The risk-free interest rate is 5% p.a. The weighted average dividend yield of the KLSE composite index is 2.3% p.a. What would be the fair value of the June 2020 KLSE CI futures contract? Maturity is 6 months. (10 marks)Two answer are required. First, assume that the interest is continuous compounding and the second, interest rate is assume non-continuous compounding ( i.e. simple interest).Q5Consider the following scenario then answer the question below.Stock MarketJanuary – KLSE composite index at 1162. Investor expects to purchase a RM10 million stock portfolio in two months’ time.March – KLSE composite index has risen to 1171, making the acquisition costs of the shares more expensive.Futures MarketJanuary – Buys March KLSE CI contracts at 1158.March – Sells March KLSE CI contracts at 1173.a. Explain why the investor has undertaken this particular hedging strategy. (5 marks)b. Assume that the investor wants to cover the full value of their expected investment. How many March KLSE CI futures contracts must they purchase? Assume that the beta factor is 1.25. (7 marks)c. Calculate the profit/loss on the futures transaction. (8 marks)
Hello! I’m a financial management student, this question is about our subject Credit and Collection Management. Please help me answer
Hello! I’m a financial management student, this question is about our subject Credit and Collection Management. Please help me answer this questions:What mistakes do business make when it comes to preventing debts and collecting on accounts?Please explain the credit and collection practices/activities here in the Philippines amidst the pandemic scare.
Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds.
Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds. The σ of your portfolio was 0.25 and was 0.21. The risk premium of index return is 8% and the risk-free interest rate is 2%. (1) What is the beta of this portfolio? (2) What is the expected return of your portfolio if it is fairly priced?

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