Questions and Answers of Internet Marketing

Assuming that zero rates are as in Problem 4.5, what is the value of an FRA that enables the holder to earn 9.5% for a three-month period starting in one year on a principal of $1,000,000? The
Suppose that zero interest rates with continuous compounding are as follows: kld4 Maturity(months)Rate(% per annum)3 8.0 6 8.2 9 8.4 12 8.5 15 8.6 18 8.7 Calculate forward interest rates for the
An investor receives $1,100 in one year in return for an investment of $1,000 now.Calculate the percentage return per annum with: kld4a. Annual compoundingb. Semiannual compoundingc. Monthly
The six-month and one-year zero rates are both 10% per annum. For a bond that has a life of 18 months and pays a coupon of 8% per annum semiannually (with a coupon payment having just been made), the
What is meant by LIBOR and LIBID. Which is higher?? kld4
A bank quotes you an interest rate of 14% per annum with quarterly compounding.What is the equivalent rate with (a) continuous compounding and (b) annual compounding? kld4
3.24. A fund manager has a portfolio worth $50 million with a beta of 0.87. The manager is concerned about the performance of the market over the next two months and plans to use three-month futures
3.23. It is now October 2007. A company anticipates that it will purchase 1 million pounds of copper in each of February 2008, August 2008, February 2009, and August 2009. The?
3.22. The following table gives data on monthly changes in the spot price and the futures price for a certain commodity. Use the data to calculate a minimum variance hedge ratio.Spot price change
3.21. It is July 16. A company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.2. The company would like to use the CME December futures contract on the S&P 500 to change
3.20. A futures contract is used for hedging. Explain why the marking to market of the contract can give rise to cash flow problems.
3.18. On July I, an investor holds 50,000 shares of a certain stock. The market price is $30 per share. The investor is interested in hedging against movements in the market over the next month and
3.15. "For an asset where futures prices are usually less than spot prices, long hedges arc likely to be particularly attractive." Explain this statement.
3.8. In the Chicago Board of Trade's corn futures contract, the following delivery months are available: March, May, July, September, and December. State the contract that should be used for hedging
3.7. A company has a $20 million portfolio with a beta of 1.2. It would like to use futures contracts on the S&P 500 to hedge its risk. The index futures price is currently 1080, and each contract is
The author's website (www,rotman.utoronto.ca/Thull/data) contains daily closing prices for the crude oil futures contract and the gold futures contract. (Both contracts arc traded on NYMEX.) You are
Suppose that there arc no storage costs for crude oil and the interest rate for borrowing or lending is 5% per annum. How could you make money on January 8, 2007, by _trading June 2007 and December
A company enters into a short futures contract to sell 5,000 bushels of wheat for 450 cents per bushel. The initial margin is S3,000 and the maintenance margin is $2,000. What price change would lead
Suppose that on October 24, 2007, a company sells one April 2008 live-cattle futures contract. It closes out its position on January 21, 2008. The futures price (per pound) is 91.20 cents when it
Identify the two commodities whose futures contracts have the highest open interest in Table 2.2.
The forward price of the Swiss franc for delivery in 45 days is quoted as 1.2500. The futures price for a contract that will be delivered in 45 days is 0.7980. Explain these two quotes. Which is more
On July 1, 2007, a U.S. company enters into a forward contract to buy 10 million British pounds on January 1, 2008. On September 1, 2007, it enters into a forward contract to sell 10 million. British
At the end of one day a clearinghouse member is long 100 contracts, and the settlement price is $50,000 per contract. The original margin is $2,000 per contract. On the following day the member
Show that, if the futures price of a commodity is greater than the spot price during the delivery period, there is an arbitrage opportunity. Does an arbitrage opportunity exist if the futures price
Suppose that in September 2007 a company takes a long position in a contract on May 2008 crude oil futures. It closes out its position in March 2008. The futures price(per barrel) is $68.30 when it
Suppose that you enter into a short futures contract to sell July silver for $10.20 per ounce on the New York Commodity Exchange. The size of the contract is 5,000 ounces.The initial margin is
What is the difference between a local and a Commission broker?
On September 12, 2006, an investor owns 100 Intel shares. As indicated in Table 1.2 the share price is $19.56 and a January put option with a strike price of $17.50 costs $0.475.The investor is
The current price of a stock is $94, and three-month European call options with a strike price of $95 currently sell for S4.70. An investor who feels that the price of the stock will increase is
Discuss how foreign currency options can he used for hedging in the situation described in Example 1.1 so that (a) ImportCo is guaranteed that its exchange rate will be less than 1.8600, and (b)
The price of gold is currently $600 per ounce. Forward contracts are available to buy or sell gold at $800 for delivery in one year. An arbitrageur can borrow money at 10% per annum. What should the
It is May and a trader writes a September call option with a strike price of $20. The stock price is $18 and the option price is $2. Describe the investor's cash flows if the option is held until
Suppose that a June put option on a stock with a strike price of $60 costs $4 and is held until June. Under what circumstances will the holder of the option make a gain? Under what circumstances will
It is July 2007. A mining company has just discovered a small deposit of gold. It will take six months to construct the mine. The gold will then be extracted on a more or less continuous basis for
Suppose you own 5,000 shares that are worth 825 each. How can put options he used to provide you with insurance against a decline in the value of your holding over the next four months?
What is the difference between the over-the-counter market and the exchange-traded market? What are the hid and offer quotes of a market maker in the over-the-counter market?
An investor enters into a short forward contract to sell 100,000 British pounds for U.S. dollars at an exchange rate of 1.9000 U.S. dollars per pound. How much does the investor gain or lose if the
The origins of the Internet are unusual in the history of commercial media. What makes it unusual and what qualities does that impart to the medium?
What do you believe are reasons for the highly visible failures of some of the early Internet enterprises?Do you see any parallels in more recent years? Are there any currendy popular Internet sires
Discuss the characteristics of Web 2.0 and give an example of each.
What are the broad outlines of Web 3.0?
"The most powerful global brands are now enterprises that were founded in the lnteaiet era."True or False?
The Internet marketing paradigm includes both marketing inputs and marketing actions. Di.~cuss the major components of both rbe inputs and the actions.
What is the Internet infrastructure stack? What is the releva nee of this technologica I concept tO marketers?Why does it now have a cloud at the top?
Discuss the role the Internet plays in the lives of consumers and businesses. I-las it changed the lives of consumers in any meaningful way? I-las it changed the way businesses operate in any
Best practices represent business activities that consisrently produce good results. What is an example you have seen that might be a best practice in customer acquisition? In customer
Internet Career Builder Exercise There are many lmemet marketing positions available at the emry level and for experienced marketers. llie opportunities genera fly exist in specific areas ~ke search
Select an organization (corporate or nonprofit) with which you are somewhat familiar that uses both online and offline channels. Discuss two or three specific examples of how it is raking advantage
Select three different websites that you will follow for rhe semester. Your instructor may make several different assignments based on these sites, so you should choose sires of substance though they
Consider creating a blog rn record your insights and discoveries as you move through the Internet marketing course. Biogs will be discussed in Chapter 9.Directions for creating your own blog can be
Consider gerting rogether with several of your da ssmares rn create a Facebook page to share resources and insights as you progress through the course. You might consider making it a closed page in
Differentiate between three key concepts:supply chain, value chain, and inregrated value chain.
Marketing has rhree core processes: nne of which is supply facing, one of which is essentially internal, and one of which is customer facing. Do you agree with this statement? Be prepared to explain
What are the business outcomes that are the result of a successful supply chain?
Do you agree with the concept that all goods are essentially services? Why or why not?
What are the business practices used by Zara that have made it responsive to customer needs and successful financially?
What stages is an enterprise likely to go through en route ro a virtual value chain?
Discuss integrative elemenL~ Dell has employed on(a) the supply side and (b) the customer side.
How does the combined use of EDI and ERP facilitate the development of an inregrated value chain?
What potential advantages does Web Services have to offer over EDI and ERP?
What is meant by Web Services? Cloud computing?
What is RFID technology? In what ways can it improve supply chain functioning?
What are the four benefits of business inregra tion?
Select an industry (e.g., automotive) or a specific company( e.g., Ford) or even better a specific product model(e.g., Ford Focus) and identify elements of irs value chain. Where can information be
Think about how you bought the text and other material for this class. It might have been through the college bookstore, a local supplier, over the lmernet, or some combination of all three. Identify
Spend some rime on the website of your school, college, or department. How does that organizal tional unit use irs website ro help studenrs visualize institutional processes, mirror activities
Locate a news article on a marketing application of RFID technology different from those described in the chapter. Discuss the application in class, being specific about how it is improving a supply
Locate a nontechnical article about Web Services in general or cloud computing in particular and discuss the implications of this way of delivering technology.l. Why is the concept of the business
Why did some early internet firms such as eT oys fail?
How does the value proposition change a firm's approach to creation of new product~ and new marketing strategies?
Can a company have more than one business model?S. How do business models evolve?
Would you start a business mday driven by the adverti~ing model?
How bas the approach to content changed over the life of the commercial Internet?
Some firms choose to generate revenue by selling or licensing their proprietary software. Others choose an open systems approach and distribute
The example of eToys .com suggest~ that multichannel retailers are more likely to experience long-run succe.~s in the Internet economy than are pure-play Internet retailers. Take a position on this
C',0nsider Figure 3.5 and the differences in profitability and sales growth between the three firms.Are there any other factors other than those mentioned in the text that explain the differences in
Internet Career Builder Exercise Select a company that markets on the Internet that you think you would like to work for after graduation and assume you are preparing for an interview. Lynn Hazan, a
Choose one of the websites you are following for .a detailed study of rhe business model ir represents.Carefully examine rhe way(s) in which obtains revenues, and rry to find our from it~ own reports
Choose a business rhar you believe fits into one of the business models in Table 3.1. Re~e.arch the element~ of its business model and examine rhe sire in considerable detail. DL~cuss both the
Think again about the retail entity from which you bought the material for this class (see Internet Exercise 2 in Chapter 2). Analyze all of the ways in which that enterprise attempts to create value
Choose one of rhe busine~s models from Table 3.l. Search for an article about an Internet business thar is representative of the model.Discuss bow the business implement~ the chosen model.
Choose one of rhe business models from Table 3.1.Construct your own hypothetical business around rhe model. Use some of functions and elements of busine.~s models dL~cussed above ro organize your
The Yahoo! example explores how web portals have evolved. Based on your knowledge of business models and wha r is going on currently, describe how you think the web portal space will evolve and
Why is it important for the marketer to distinguish ber,,veen custo1ner acquisition, conversion, and retention when developing marketing strategies?
How doe.~ "the offer" differ from "the product" of traditional mass media marketing?
In addition m the offer, what are the elements of a direct marketing strategy?
How do direct marketers distinguish between the"front end" and the "back end" of a transaction?Why i~ this important?
Explain the "customer lifetime value" concept.Thinking about a specific firm, how could it use the concept of CL V to increase the overall profitability of its customer base?
How i~ testing different from marketing research?
Why and how does testing offer opportunities to Internet marketers?
What are some types oi analytics that are supported by the customer data base?
Distinguish bet ween the concepts of customer profiles, market segment~, and predictive modeling.l O. Explain the related concepts of data warehousing and data mining.11 . What do you think the
Register at a B2C website-one of those you chose to track for the semester if one is appropriate. lf not, choose another site for this exercise.a. Ca rdully consider the potential value of the data
Choose a website that permits personalizationporta Is or large content sites are a good choice.Personalize your own page on the site. Think ab out the kinds of customer data that are produced as you
Visit a website that you patronize frequently, one from which you have purchased something, if possible.Identify two marketing elements rhar c ould usefully be tested. How would you go about setting
Think about your own Internet use habits. Have you changed your use of traditional media? Why or why not? How do your own habits fit the media use attitudes and patterns described in this chapter?
A businessperson who is nor an lnternet expert asks you whether the Internet is useful for branding.What answer would you give and how could you support it with examples?
What are special tools and techniques that enterprises can use in their bra ncl-building process on the web?
Do you believe that online advertising has more potential ro engage viewers than mass media adverti~ing? Why or why nor?
What is a branded community? If you are a memher of one or more branded communities, what has your experience been? If you are not, why have you not joined communities for products or services you

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