Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

hello i need help with the below finance homework thank you and looking forward to a quality answer homework covers Ch 10, 13, and 14.

image text in transcribed

hello i need help with the below finance homework

thank you and looking forward to a quality answer

image text in transcribed homework covers Ch 10, 13, and 14. It has to be your individual work. Copying answer from others will violate ACADEMIC HONESTY policy to cause a failing grade. For each question, please show the necessary derivation (if applicable) and highlight the answer. Limit your answers within 5 pages. No cover sheet is required. Q1: Ch 10 (10%) Go www.nasdaq.com/markets/ipos and review an IPO that is scheduled for the near future. Review the deal information about this IPO. What is the offer amount? How much are total expenses? How much are total expenses as a percentage of the deal amount? How many shares are issued? How long is the lockup period? Q2: Ch 10 (10%) Review some additional IPOs that are scheduled. What is the range for the offer amount? What is the range for the lockup period length? Q3: Ch 13 (15%) a. Spratt Company purchased Treasury bond futures contracts when the quoted price was 93-50. When this position was closed out, the quoted price was 94-75. Determine the profit or loss per contract, ignoring transaction costs. b. Suerth Investments, Inc., purchased Treasury bond futures contracts when the quoted price was 95-00. When this position was closed out, the quoted price was 93-60. Determine the profit or loss per contract, ignoring transaction costs. c. Marks Insurance Company sold S&P 500 stock index futures that specified an index of 1690. When the position was closed out, the index specified by the futures contract was 1,720. Determine the profit or loss, ignoring transaction costs. Q4: Ch 13 (10%) Go to www.investing.com and review the charts for an equity index product such as the S&P 500. Explain how the price pattern moved recently. Q5: Ch 13 (10%) Now, compare that pattern to the actual trend of the S&P 500, which is provided at the Yahoo! Finance website (finance.yahoo.com). describe the relationship between the movements in S&P 500 futures and movements in the S&P 500 index. Q6: Ch 14 (10%) DePaul Insurance Company purchased a call option on an S&P 500 futures contract. The option premium is quoted as $6. The exercise price is $1,430. Assume the index on the futures contract becomes $1,440. Should DePaul exercise the call option or let it expire? What is the net gain or loss to DePaul after accounting for the premium paid for the option? Q7: Ch 14 (15%) Smart Savings Bank desired to hedge its interest rate risk. It was considering two possibilities: (1) sell Treasury bond futures at a price of 94-00, or (2) purchase a put option on Treasury bond futures. At the time, the price of Treasury bond futures was 95-00. The face value of Treasury bond futures was $100,000. The put option premium was 2-00, and the exercise price was 94-00. Just before the option expired, the Treasury bond futures price was 91-00, and Smart Savings Bank would have exercised the put option at that time, if at all. This is also the time when it would offset its futures position, if it had sold futures. Determine the net gain to Smart Savings Bank if it had sold Treasury bond futures versus if it had purchased a put option on Treasury bond futures. Which alternative would have been more favorable, based on the situation that occurred? Q8: Ch 14 (20%) Go to www.cboe.com and, under "Quotes & Data," select "Delayed Quotes." Insert the ticker symbol for a stock option in which you are interested. Assess the results. Did the premium ("Net") on the call options increase or decrease today? Did the premium on the put options increase or decrease today? a. Based on the changes in the premium, do you think the underlying stock price increased or decreased? Explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Focus On Personal Finance

Authors: Jack R. Kapoor, Les R. Dlabay Professor, Robert J. Hughes, Melissa Hart

5th Edition

0077861744, 978-0077861742

More Books

Students also viewed these Finance questions

Question

How are the signs of stress, burnout, and reality shock related?

Answered: 1 week ago