All Matches
Solution Library
Expert Answer
Textbooks
Search Textbook questions, tutors and Books
Oops, something went wrong!
Change your search query and then try again
Toggle navigation
FREE Trial
S
Books
FREE
Tutors
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Hire a Tutor
AI Study Help
New
Search
Search
Sign In
Register
study help
business
fundamentals of investments valuation
Questions and Answers of
Fundamentals Of Investments Valuation
Exercise 5-5 Macroeconomic net present value method A local transportation authority is considering the prolongation of a tramway in order to connect a new residential area to the local
Exercise 5-4 Scoring model After three successful periods, the car sharing company considers expanding its business. In order to extend the variety of products, the company considers purchasing
Exercise 5-3 Completefinancialplan The following situation describes two investment alternatives:AK Rasant SM Samurai Initial outlay 9,000 14,000 PVA 1.8594 2.7232 Cash flow per period 7,400 8,100
Exercise 5-2 Net present value method and inflation A company considers purchasing a machine for € 6,000 at the beginning of year 1. It has a three-year economic life and will reduce annual labour
Exercise 5-1 Net present value method and taxation A fanner is concerned about the modernisation of his equipment. He considers if it makes sense to purchase so-called milking robots. This
Exercise 4-4 Investment decision making under uncertainty -Decision tree analysis:flexible planning Close to a castle, possibly nominated for the list of the UNESCO World Heritage, an investor wants
Exercise 4-3 Investment decision making under uncertainty -Risk analysis A leisure park's management intends to buy a little train, which provides the visitors of the parks with the possibility to
Exercise 4-2 Investment decision making under uncertainty - Sensitivity analysis The municipal administration is responsible for the maintenance of school buildings. In a storage room, a kitchen is
Exercise 4-1 Investment decision making under uncertainty -Correction method The management of a university plans to ameliorate the conditions of studying in a certain degree course. To reach this
Exercise 3-11 Non-discounting and discounting methods ofinvestment appraisal To generate warm water, a landlord checks if sun collectors on the roof are a worthwhile investment. The initial outlay
Exercise 3-10 Accounting rate ofreturn method and internal rate ofreturn method In a zoo, a new fish basin is to be installed. A capital expenditure of € 150,000 is necessary.The period of use is
Exercise 3-9 Internal rate ofreturn method An investment can be characterised as follows: Initial outlay: € 60,000 (to be paid at the decision point of time), economic life: 5 years. The estimated
Exercise 3-8 Annuity method Refer to the information in exercise 3-4. In that exercise you decided whether the purchase of land was worthwhile. Transfer the net present values into annuities.
Exercise 3-7 Cost comparison method and net present value method A company has the opportunity to buy a new van for the car pool. It can choose among three models which are equal in quality. The
Exercise 3-6 Net present value method V A landlord considers installing photovoltaic equipment on his roof. Photovoltaic equipment serves solar power generation. It enables the direct transfer of
Exercise 3-5 Net present value method IV A company is considering buying new hardware and software. The manufacturer submits three different offers.1. Immediate purchase of the equipment for €
Exercise 3-4 Net present value method III Suppose that an investor plans to buy land. Three plots of land could be acquired. They are characterised by the following financial details:Land I Land II
Exercise 3-3 Net present value method II Through the conversion of a storage building which is currently unused into a flat let for rent, income could be generated. The costs for conversion,
Exercise 3-2 Net present value method I It is your task to assess two mutually exclusive investment projects:Alternative A Alternative B Initial outlay 10,000 15,000 Economic life Discount rate in
Exercise 3-1 Basics ofthe discounting methods ofinvestment appraisala) At the beginning of year 1 you can invest € 5,000. If the interest rate is 8 % per annum, how much will you get at the end of
Exercise 2-12 Diverse methods ofnon-discounting investment appraisal The health resort 'Nice Beach' on an island in the North Sea wants to enhance their service for the two million guests on one hand
Exercise 2-11 Payback method- Replacement decision For the investment in exercise 2-7 resp. exercise 2-9 we now compare the project by means of the payback method in addition to the already
Exercise 2-10 Accounting rate ofreturn method andpayback method- Comparison of alternatives A residence administering agency plans to purchase a new IT system in order to better control receiving
Exercise 2-9 Accounting rate ofreturn method- Replacement decision Compute the accounting rate of return for the investment in exercise 2-7. We decided there whether it was useful to replace the old
Exercise 2-8 Accounting rate ofreturn method- Comparison ofalternatives A local authority plans to purchase a new climbing wall for a gym used by several sports clubs. The clubs rent the gym for €
Exercise 2-7 Profit comparison method- Replacement decision The Copy Inc. produces copy machines, which are sold at a unit price of € 6,000. The company has the opportunity to buy a new production
Exercise 2-6 Profit comparison method- Comparison ofalternatives with critical values In order to support its tourism offerings in the summer, a local authority runs an excursion boat which is need
Exercise 2-5 Profit comparison method- Comparison ofalternatives Harvesting asparagus means working by hand. However, this may soon change. Recently, a harvesting machine has been developed for the
Exercise 2-4 Cost comparison method- Replacement decision You should decide whether it is profitable to replace an old car by a new one. The original car can be abandoned if it has high maintenance
Exercise 2-3 Cost comparison method- Comparison ofalternatives with critical values A company is considering launching a new product. To produce this product a machine is necessary. The company must
Exercise 2-2 Cost comparison method- Comparison ofalternatives with salvage values A company is undertaking an investment appraisal for a new copy machine. It estimates the relevant decision data of
Exercise 2-1 Cost comparison method- Comparison ofalternatives A company is considering buying a punching machine. Two possible systems are under investigation. They are characterised by the
Exercise 1-4 Investment appraisal What is the most important difference between non-discounting and discounting methods of investment appraisal?
Exercise 1-3 Types of investments Assign the following investments to the right column:Investment Physical investment Financial investment Intangible investment You buy a cleaning machine.An
Exercise 1-2 Investment andfinancing with their performance in the balance sheet and the profit and loss account Go back to Section 1.2, where the foundation of the car sharing company is
Exercise 1-1 Connection between investment andfinancing Assign the following business transactions to the right column:Business transaction Investment Financing A loan is taken out by the house
Prove this theorem Theorem A.4 If X = ln Y ∼ N(m, s2) and K > 0, we have E [max (0, Y-K)]=e+N m- -KN (+)-KN (m-K) m-In InK) m-In K =E[Y] N +8 KN S (m-Ink). K
EXERCISE 11.1 (Caplets and options on zero-coupon bonds) Assume that the lognormal LIBOR market model holds. Use the caplet formula (11.19) and the relations between caplets, floorlets, and European
(The Hull-White model calibrated to the Vasicek yield curve) Suppose the observable bond prices are fitted to a discount function of the formwhere y∞, , and are constants. This is the discount
(Calibration of the CIR model) Compute b′( ) in the CIR model by differentiation of (7.73) on page 177. Find out which types of initial forward rate curves the CIR model can be calibrated to, by
EXERCISE 7.6 (Expectation hypothesis in Vasicek) Verify that the local weak and the weak yield-tomaturity versions of the expectation hypothesis hold in the Vasicek model.
EXERCISE 7.5 (Comparison of prices in the models of Vasicek and CIR) Compare the prices according to Vasicek’s model (7.52) and the CIR-model (7.68) of the following securities:(a) 1 year and 10
EXERCISE 7.4 (CIR zero-coupon bond price) Show that the functions b and a given by (7.73) and (7.74)solve the ordinary differential equations (7.71) and (7.72).
EXERCISE 7.3 (Futures on bonds) Show the last claim in Theorem 7.2.
EXERCISE 7.2 (Call on zero-coupon bonds in Vasicek’s model) Figure 7.9 on page 175 shows an example of the relation between the price of a European call on a zero-coupon bond and the current short
EXERCISE 7.1 (Parallel shifts of the yield curve) The purpose of this exercise is to find out under which assumptions the only possible shifts of the yield curve are parallel, i.e. such that d¯yt
EXERCISE 6.5 Consider a swap with starting date T0 and a fixed rate K. For t T0, show that V fl t /V fix t = ˜L,T0 t /K, where ˜L,T0 t is the forward swap rate.
EXERCISE 6.4 Show the parity (6.55). Show that a payer swaption and a receiver swaption (with identical terms) will have identical prices, if the exercise rate of the contracts is equal to the
EXERCISE 6.3 Let ˜lT 0 (k) be the equilibrium swap rate for a swap with payment dates T1, T2, . . . , Tk, where Ti = T0 + i as usual. Suppose that ˜lT 0 (1), . . . ,˜lT 0 (n) are known. Find a
EXERCISE 6.2 Show of the put-call parity for options on coupon bonds by a replication argument, i.e.form two portfolios that have the same payoffs and conclude from their prices that (6.21) must hold.
EXERCISE 6.1 Show that the no-arbitrage price of a European call on a zero-coupon bond will satisfyprovided that all interest rates are non-negative. Here, T is the maturity date of the option, K is
EXERCISE 5.4 Constantinides (1992) develops a theory of the nominal term structure of interest rates by specifying exogenously the nominal state-price deflator ˜. In a slightly simplified version,
EXERCISE 5.3 Go through the derivations in Section 5.5.3.
EXERCISE 5.2 The purpose of this exercise is to show that the claim of the gross return pure expectation hypothesis is inconsistent with interest rate uncertainty. In the following we consider time
EXERCISE 5.1 The term premium at time t for the future period [t′, T] is the current forward rate for that period minus the expected spot rate, i.e. ft′,T t − Et[yT t′ ]. This exercise will
Show Equation (4.13).
Find the dynamics of the process defined in (3.51).
Consider the two general stochastic processes x1 = (x1t) and x2 = (x2t) defined by the dynamicswhere z1 and z2 are independent one-dimensional standard Brownian motions. Interpret μit, it, and
(Adapted from Bj¨ork (2004).) Define the process y = (yt) by yt = eazt , where a is a constant and z = (zt) is a standard Brownian motion. Find the dynamics of y. Show thatDefine m(t) = E[yt]. Show
(Adapted from Bj¨ork (2004).) Define the process y = (yt) by yt = z4 t , where z = (zt) is a standard Brownian motion. Find the dynamics of y. Show thatShow that E[yt] E[z4 t ] = 3t2, where E[ ]
EXERCISE 2.1 Find a list of current price quotes on government bonds at an exchange in your country.Derive as many discount factors and zero-coupon yields as possible using only the no-arbitrage
EXERCISE 1.2 Consider two bullet bonds, both with annual payments and exactly four years to maturity.The first bond has a coupon rate of 6% and is traded at a price of 101.00. The other bond has a
EXERCISE 1.1 Show that if the discount function does not satisfy the conditionthen negative forward rates will exist. Are non-negative forward rates likely to exist? Explain! B B, T
What is fixed income analysis?
What are the Types of investments
What is the Connection between investment and financing
A local transportation authority is considering the prolongation of a tramway in order to connect a new residential area to the local transportation system. Until now the area could be reached only
After three successful periods, the car sharing company considers expanding its business. In order to extend the variety of products, the company considers purchasing either another BMC Minerva or a
The following situation describes two investment alternatives:Set up a complete financial plan for the investment of the BMC Minerva under the following conditions: The investment is financed with
A company considers purchasing a machine for € 6,000 at the beginning of year 1. It has a three-year economic life and will reduce annual labour expenses by € 2,700. The investors’expectations
A farmer is concerned about the modernisation of his equipment. He considers if it makes sense to purchase so-called milking robots. This complicated technical equipment consists of a box regulated
Close to a castle, possibly nominated for the list of the UNESCO World Heritage, an investor wants to build a leisure park. The listing would significantly increase the name recognition of the castle
A leisure park’s management intends to buy a little train, which provides the visitors of the parks with the possibility to take round trips. The estimated investment costs are € 630,000 for the
The municipal administration is responsible for the maintenance of school buildings. In a storage room, a kitchen is to be installed in order to offer the pupils a warm meal. The equipment would cost
The management of a university plans to ameliorate the conditions of studying in a certain masters’ degree course. To reach this aim there are two basic different possibilities:1. Construction of a
To generate warm water, a landlord checks if sun collectors on the roof are a worthwhile investment. The initial outlay would be € 4,000. The economic life is estimated to be 20 years. Experience
In a zoo, a new fish basin is to be installed. A capital expenditure of € 150,000 is necessary.The period of use is assumed to be 30 years. Due to the increased attraction of the zoo, the number of
An investment can be characterised as follows: Initial outlay: € 60,000 (to be paid at the decision point of time), economic life: 5 years. The estimated cash outflow and cash inflow are as shown
Refer to the information in exercise 3-4. In that exercise you decided whether the purchase of land was profitable. Transfer the net present values into annuities.
A company has the opportunity to buy a new van for the car pool. It can choose among three models which are equal in quality. The appropriate discount rate is 4 %. The following data should be used
A landlord considers installing photovoltaic equipment on his roof. Photovoltaic equipment generates solar power. It enables the direct transfer of sunlight into electric power. The roof accepts an
A company is considering buying new hardware and software. The manufacturer submits three different offers.1. Immediate purchase of the equipment for € 10,200.2. Closure of a leasing contract with
A company is considering an investment which can be characterised as follows:The initial outlay is supposed to be € 48,000, the interest rate 4 %.a) Calculate the net present value and state
Suppose that an investor plans to buy land. Three plots of land could be acquired. They are characterised by the following financial details:State the reason for your evaluation of the purchase using
Through the conversion of a storage building which is currently unused into a flat let for rent, income could be generated. The costs for conversion, occurring at the decision point of time, would be
It is your task to assess two mutually exclusive investment projects:a) Which alternative would you select for acceptance under the conditions of the net present value method? Explain why.b)
a) At the beginning of year 1 you can invest € 5,000. If the interest rate is 8 % per annum, how much will you get at the end of year 6?b) Suppose in three years you would need the sum of €
The health resort ‘Nice Beach’ on an island in the North Sea wants to enhance their service for the two million guests on one hand and to make the billing of the visitor’s tax more efficient on
For the investment in exercise 2-7 resp. exercise 2-9 we now compare the project by means of the payback method in addition to the already calculated profit comparison and comparison of accounting
A residence administering agency plans to purchase a new IT system in order to better control receiving rents and to adjust rents to market conditions sooner. Presently the agency has a loss in
Compute the accounting rate of return for the investment in exercise 2-7. We decided there whether it was useful to replace the old production line with the help of the profit comparison method.a)
A local authority plans to purchase a climbing wall for a gym used by several sports clubs.The clubs rent the gym for € 48 per hour. The local authority considers installing the climbing wall and
The Copy Inc. produces copy machines, which are sold at a unit price of € 6,000. The company has the opportunity to buy a new production line. For investment decisions the company implements a 13 %
In order to support its tourism offerings in the summer, a local authority runs an excursion boat which is need of renovation. There are two alternative offers for a new boat:a) Using the profit
Harvesting asparagus means working by hand. However, this may soon change. Recently, a harvesting machine has been developed for the vegetable growing on dams and has been presented at an
You should decide whether it is profitable to replace an old car by a new one. The original car can be abandoned if it has high maintenance costs. The current annual repair costs for the existing car
A company is considering launching a new product. To produce this product a machine is necessary. The company must choose between two methods of production. The company uses an interest rate of 5 %.
A company is undertaking an investment appraisal for a new copy machine. It estimates the relevant decision data of the alternatives to be as in the table:a) Evaluate the purchase of the respective
A company is consideringuying a punching machine. Two possible systems are under investigation. They are charact berised by the following data:Assess the investment with the help of the cost
What is the most important difference between non-discounting and discounting methods of investment appraisal?
Showing 1 - 100
of 1844
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Last