I need help with these last 3 homework questions. Thank you
4. Use the option data from the table (table below) to determine the rate Google would have paid if it had issued $95.00 billion in zero-coupon debt due in January 2011. Suppose Google currently had 316.65 million shares outstanding, implying a market value of $133.23 billion. Risk-free rate is 1.20 % (Assume perfect capital markets.) The yield on the Google debt is (?) %. (Round to one decimal place.) GOOG 420.75 +7.87 Jul 13 2009 @ Vol 13:10EST 2177516 Calls Bid Ask Open Int 11 Jan 150.0 (OZF AJ) 273.6 276.90 100 0 11 Jan 160.0 (OZF AL) 264.5 267.52 82 0 0 11 Jan 200.0 (OZF AA) 228.9 231.20 172 0 11 Jan 250.00 (OZF 186.5 188.80 103 AU) 0 11 Jan 280.0 (OZF AX) 162.8 165.00 98 0 11 Jan 300.0 (OZF AT) 148.2 150.10 408 0 11 Jan 320.0 (OZF AD) 133.9 135.90 63 0 11 Jan 340.0 (OZF AI) 120.5 122.60 99 0 11 Jan 350.0 (OZF AK) 114.1 116.10 269 0 11 Jan 360.0 (OZF AM) 107.9 110.00 66 0 11 Jan 380.0 (OZF AZ) 95.80 98.00 88 11 Jan 400.0 (OZF AU) 85.10 87.00 2577 11 Jan 420.0 (OZF AG) 74.60 76.90 66 11 Jan 450.0 (OZF AV) 61.80 63.30 379 Given the CBOE call option quotes for Google stock, we can calculate the implied debt yield given perfect markets if Google were to borrow by issuing 18-month, zero coupon bonds. 5. Your utility company will need to buy 150,000 barrels of oil in 10 days time, and it is worried about fuel costs. Suppose you go long 105 oil futures contracts, each for 1,000 barrels of oil, at the current futures price of $60.00 per barrel. Suppose futures prices change each day as follows: a. What is the mark-to-market profit or loss (in dollars) that you will have on each date? b. What is your total profit or loss after 10 days? Have you been protected against a rise in oil prices? c. What is the largest cumulative loss you will experience over the 10 -day period? In what case might this be a problem? a. What is the mark-to-market profit or loss (in dollars) that you will have on each date? Calculate the mark-to-market profit or loss below: (Round price change to the nearest cent and profit or loss to the nearest dollar.) Da Pric Price Profit/L y e Change oss $59. 1 $ (?) $ (?) 50 6. Your start-up company has negotiated a contract to provide a database installation for a manufacturing company in Poland. That firm has agreed to pay you $110,000 in three months time when the installation will occur. However, it insists on paying in Polish zloty (PLN). You don't want to lose the deal (the company is your first client!), but are worried about the exchange rate risk. In particular, you are worried the zloty could depreciate relative to the dollar. You contact Fortis Bank in Poland to see if you can lock in an exchange rate for the zloty in advance. You find the following table posted on the bank's Web site, showing zloty per dollar, per euro, and per British pound: 1 week 2 weeks USD purchase 3.1442 3.1389 sale 3.1808 3.1719 EUR purchase 3.7804 3.7814 sale 3.8214 3.8226 GBP purchase 5.5131 5.5131 sale 5.5750 5.5750 a. What exchange rate could you lock in for the zloty in three months? How many zloty should you demand in the contract to receive $110,000 ? b. Given the bank forward rates in part (a ), were short-term interest rates higher or lower in Poland than in the United States at the time? How did Polish rates compare to euro or pound rates? Explain. a. What exchange rate could you lock in for the zloty in three months? You could lock in an exchange rate of zloty per U.S. dollar in three months time through a forward contract with the bank.(Round to four decimal places.)
