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Finance

A fund manager has a portfolio worth $100 million with a beta of 1.5.  The manager is concerned about the performance of the market over the next two months and plans to use three-month futures contracts on the S&P 500 to hedge the risk.  The current level of the index is 2250, one contract is on 250 times the index, the risk free rate is 2%, and the        dividend yield on the index is 1.7% per year. (Assume all the rates are continuously compounded.)

 

  1. What is the theoretical futures price for the three-month futures contract?

 

  1. What position should the fund manger takes to eliminate all exposure to the market over the next two months?
  2. c) Calculate the effect of your strategy on the fund manager’s returns if the level of the market in two months is 2,000, 2,200, 2,500, 2,800, and 3,000.
Answered
13 May 2020
Finance

A bond with a $1,000 par value pays a coupon of $40 every six months. The bond has 12 years until maturity and a required return of 8%. If the required return suddenly dropped to 6%, what would be the percentage change in the bond’s price?

Answered
7 May 2020
Finance
A taxpayer should include which of the following when figuring their federal gross income?
 
  1. Prior-year federal income tax refund
  2. Ordinary dividends
  3. Personal injury compensation
  4. Qualified disaster relief payments
Answered
15 Jan 2020
Finance

What is market value and what is the difference between market value and book value?

Answered
22 Apr 2020
Finance

How to calculate holding period return?

 

Answered
15 Apr 2020
Finance
The primary source of revenue for a wholesaler is
 
A) investment income.
 
B) service revenue.
 
C) the sale of merchandise.
 
D) the sale of plant assets the company owns.
Answered
9 Apr 2020
Finance

The current zero-coupon yield curve for risk-free bonds is as follows:

 

Maturity (years) 1 2 3 4 5
YTM 4.96% 5.45% 5.74% 5.96% 6.04%

What is the risk-free interest rate for a five-year maturity?

 

Answered
1 Apr 2020
Finance

How to calculate payback period?

Answered
31 Mar 2020
Finance

What is the beta of the following portfolio?

A. 1.007

B. 0.447

C. 1.146

D. 1.067

E. 1.113

Answered
5 Mar 2020
Finance

What is meant by the percentage of sales method?

Answered
5 Mar 2020
Finance

What is a financial investment?

Answered
20 Feb 2020
Finance

Explain how to find revenue.

Answered
6 Mar 2020
Finance

How to calculate ROI?

Answered
29 Jan 2020
Finance

What is the formula for calculating the payback period?

Answered
10 Feb 2020
Finance

Which of the following is the most liquid asset?

a. Capital goods

b. Stocks and bonds with low risk.

c. Stocks and bonds with a high risk.

d. Funds in a checking account.

Answered
18 Mar 2020
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