Financial decision making, questions and data see the pics
fx A B C D E F G H RAW DATA 2 NDX 100 S&P 500 Hi Yld Bond BITCOIN 3 QQQ ETF SPY ETF HYG ETF XBT / USD 4 PERIOD DATE Beta = 1.08 Beta = 1.01 Beta = 0.34 Beta = 0 24 10.202 275.92 342.58 93.42 13,850 23 9.202 284.3 350.64 93.03 10,707 22 8.202 301.44 365.01 93.86 11,679 8 21 7.202 271.43 340.51 93.83 11,346 9 20 6.202 252.6 320.93 89.29 9,147 10 19 5.202 237.83 316.09 89.76 9,505 11 18 4.202 222.88 301.12 87.2 8,827 12 17 3.202 193.66 266.66 83.18 6,481 13 16 2.202 209.12 305.88 92.45 8,633 14 15 1.202 222.38 331.52 93.63 9,354 15 14 12.2019 215.61 330.99 93.65 7,158 16 3 11.2019 207.78 322.58 92.17 7,710 17 12 10.2019 199.46 310.69 91.62 9,189 18 11 9.2019 190.9 303.36 91.58 8,241 19 10 8.2019 189.35 298.35 91.16 9,626 20 9 7.2019 192.83 302.83 90.51 10,027 21 8 6.2019 188.24 297.72 90.37 11,393 22 7 5.2019 175.17 279.15 87.61 8,503 23 6 4.2019 190.68 297.57 89.31 5,238 24 5 3.2019 180.56 285.32 88.43 4,093 25 4 2.2019 173.88 280.92 87.3 3,803 26 1.2019 168.66 271.55 86.26 3,417 27 IN 12.2018 154.57 250.92 81.83 3, 674 28 11.2018 169.54 276.2 83.98 3,930 29 0 10.2018 169.82 270.63 84.35 6,302 30 5.2% Equity Risk Premium = 31 US Treasury 10Yr = 0.8% 32 Exp Mkt Return = 5.2% + 0.8% = 6.0% 33 34 35 36 Sheet1fx A B C D E F G H RAW DATA 2 NDX 100 S&P 500 Hi Yld Bond BITCOIN 3 QQQ ETF SPY ETF HYG ETF XBT / USD 4 PERIOD DATE Beta = 1.08 Beta = 1.01 Beta = 0.34 Beta = 0 24 10.202 275.92 342.58 93.42 13,850 23 9.202 284.3 350.64 93.03 10,707 22 8.202 301.44 365.01 93.86 11,679 8 21 7.202 271.43 340.51 93.83 11,346 9 20 6.202 252.6 320.93 89.29 9,147 10 19 5.202 237.83 316.09 89.76 9,505 11 18 4.202 222.88 301.12 87.2 8,827 12 17 3.202 193.66 266.66 83.18 6,481 13 16 2.202 209.12 305.88 92.45 8,633 14 15 1.202 222.38 331.52 93.63 9,354 15 14 12.2019 215.61 330.99 93.65 7,158 16 3 11.2019 207.78 322.58 92.17 7,710 17 12 10.2019 199.46 310.69 91.62 9,189 18 11 9.2019 190.9 303.36 91.58 8,241 19 10 8.2019 189.35 298.35 91.16 9,626 20 9 7.2019 192.83 302.83 90.51 10,027 21 8 6.2019 188.24 297.72 90.37 11,393 22 7 5.2019 175.17 279.15 87.61 8,503 23 6 4.2019 190.68 297.57 89.31 5,238 24 5 3.2019 180.56 285.32 88.43 4,093 25 4 2.2019 173.88 280.92 87.3 3,803 26 1.2019 168.66 271.55 86.26 3,417 27 IN 12.2018 154.57 250.92 81.83 3, 674 28 11.2018 169.54 276.2 83.98 3,930 29 0 10.2018 169.82 270.63 84.35 6,302 30 5.2% Equity Risk Premium = 31 US Treasury 10Yr = 0.8% 32 Exp Mkt Return = 5.2% + 0.8% = 6.0% 33 34 35 36 Sheet1You are offered the opportunity of lifetime; a financially challenged property developer needs to borrow funds quickly to build a hospital in the emirate. He is willing to double your money and pay you back in around 3 months. He is offering collateral of uncut diamonds, but the collateral will remain in the vault of a local 'ewellers. You don't believe that you will get your money back in 3 months but think that the developer will possibly pay you back in 12 months and most likely within 36 months. You are trying to decide if the return is worth the risk. You estimate the following probabilities 100,000 Payback in 12 mos. 20% 100,000 Payback in 24 mos. 20% 100,000 Payback in 36 mos. 20% 250,000 of diamond in 48 mos. 20% 0 receive nothing. 20% You are willing to offer 50,000 and will (hopefully) receive 100,000 upon payoff. You estimate the uncut diamonds are valued at 250,000. What is the estimated internal rate of return on investment? Is there more than one IRR? You decide to borrow the 20,000 on a credit card and 30,000 on a payday loan. The credit card quoted interest is 18% compounded monthly. The payday loan quoted interest rate is 52% compounded weekly. What is the effective annual rate (EAR) for the credit card and loan? A recession hits after 12 months and you realise that you are unlikely to be repaid. Calculate vwvvwv the outstanding balance on the credit card and loan at 12 months and the monthly payment required on the credit card and weekly payment required on the loan to pay off the balance by the end of 48 months {36 months' time). After repaying the balance of your borrowings, to your great surprise 100% of the 100,000 outstanding shares of the company that owns the uncut diamonds, Sparkles plc is transferred to your name. The diamonds need to be cut and polished. The cutting will cost around 55,000 and the polishing around 35,000. The investment bank organising the rights offer will charge Sparkles 10,000 in fees. You do not have any cash left and want pay for the above expenses or buy additional shares via a rights offering. You want to maintain majority control (>50%) of shares outstanding and raise at least 25,000 from selling all of your rights, is this possible? How would you structure the rights offer to maximise your ownership while raising 25,000 from the sale of rights? How would implementing Modiglini and Miller Proposition II with taxes change your answer to d&e? Would you propose an alternative to the rights offer
