In this project, you will purchase a house for your family, and choose a mortgage from the market, and conduct some mortgage analysis. I suggest that you visit at least one (1) open house prior to completing this assignment. The house/condo should be the type that you think you might be interested in purchasing sometime in the future in your real lives. Be sure to pick up and review the “feature sheet” that the realtor will provide. There are also many websites that provide listing and other property information. For example, you can browse www.zillow.com. Assuming that you are the head of a household. You are also an employee of ISU. Since you need to commute to ISU to work, you must keep this in mind when you do your house hunting. Your family income and down payment are based on this rule: your family income will be the last 5 digits of your student id number, plus $50,000. For example, if your chosen student id is 002355531, your family income will be $55,531+$50,000=$105,531 p
3(a) Consider a pension plan that will pay $10,000 once a year for a 5-year period (5 annual payments). The first payment will come in exactly 5 years (at the end of year 5) and the last payment in 9 years (at the end of year 9). What is the duration of the pension obligation? The current interest rate is 10% per year for all maturities. (3 marks) (3) (b)To generate the scheduled pension payments, the pension fund wants to invest the present value of the future payouts in bonds and match the duration of its obligation in part a). If the fund uses 5-year and 10-year zero-coupon bonds to construct its investment position, how much money (dollar amount) ought to be placed in each bond now? What should be the total face value (not current market value) of each zero-coupon bond held? (3)(c) Right after the fund made its investment outlined in part b), market interest rates for all maturities dropped from 10% p.a.to 9% p.a. Show that the investment position constructed in part b) can still f
All the references are from John Hull's book (Risk Management and financial Institutions 4th edition) In Table 2.2 in text, suppose that suppose that DLC’s income before tax is normally distributed with mean 0.5 and standard deviation 2.5 The tax rate is 30%. What is the probability that DLC’s equity will be wiped out in one year? Problem 3.19 in text. Use Excel in conjunction with the Solver tool. You should include a table demonstrating why your answer is correct. An investor divides his money between hedge funds that earn (before fees) -20%, -5%, +10%, +20%, +25%, and +30%. All hedge funds charge 2 plus 20%. What is the overall return on the investments? How is it divided between the hedge fund and the investor? How does your answer change if a fund of funds charging 1 plus 5% is used. (Assume that the fund of fund incentive fee applies to the net (after fees) profits from the hedge funds.) How does Table 6.1 in text change if the principal assigned to the senior, mezzanine, and
We are examining a new project. We expect to sell 5,200 units per year at $66 net cash flow apiece for the next 10 years. In other words, the annual operating cash flow is projected to be $66 × 5,200 = $343,200. The relevant discount rate is 17 percent, and the initial investment required is $1,510,000. After the first year, the project can be dismantled and sold for $1,230,000. Suppose you think it is likely that expected sales will be revised upward to 8,200 units if the first year is a success and revised downward to 3,800 units if the first year is not a success. Suppose the scale of the project can be doubled in one year in the sense that twice as many units can be produced and sold. Naturally, expansion would be desirable only if the project were a success. This implies that if the project is a success, projected sales after expansion will be 16,400. Note that abandonment is an option if the project is a failure. If success and failure are equally likely, what is the NPV of the
Assignment:
Read the "Mini Case" at the end of chapter 12 called "A Job at S&S Air" Answer all five questions. Make sure you have read the chapter prior to starting this assignment so you are able to calculate the sharpe ratio. The case is on pages 418-419. Submit your answers to this assignment.
Analysis: MYOB
Part NO.1 Forecast Assumptions
Part NO.2 Sensitivity Analysis
Just follow the example.
Company A offers $30 per share to acquire Company B. Company's B estimated value of equity is $50 million, it has debt of 5 million, and outstanding shares of 2 million. This will probably result in: a decrease in Company A's stock price a decrease in Company B's stock price an increase in Company A's stock price none of the above no change in Company B's stock price Move Flag this Question Question 2 2 pts In a financial merger: In a financial merger: the merged companies combine operations Equity is used to finance the merger Debt is used to finance the merger the merged companies do not combine operations none of the above Move Flag this Question Question 3 2 pts Delta Airlines and Northwest Airlines merged in 2008. This merger is an example of: Delta Airlines and Northwest Airlines merged in 2008. This merger is an example of: a vertical merger more information is needed to answer this question a conglomerate merger none of the above a horizontal merger Move Flag this Question Ques
