Questions from Corporate Finance

Q: Yesterday, you sold six-month futures on the German DAX

Yesterday, you sold six-month futures on the German DAX stock market index at a price of 13,200. Today, the DAX closed at 13,150 and DAX futures closed at 13,250. You get a call from your broker, who...

Q: Calculate the value of a six-month futures contract on a

Calculate the value of a six-month futures contract on a Treasury bond. You have the following information: 1. Six-month interest rate: 10% per year, or 4.9% for six months. 2. Spot price of bond: 95....

Q: In December 2017, six-month futures on the Australian S

In December 2017, six-month futures on the Australian S&P/ASX 200 Index traded at 5,947. Spot was 6,001. The interest rate was 1.8% a year, and the dividend yield was about 4.4% a year. Were the futur...

Q: Calculate convenience yield for magnoosium scrap from the following information:

Calculate convenience yield for magnoosium scrap from the following information: 1. Spot price: $2,550 per ton. 2. Futures price: $2,408 for a one-year contract. 3. Interest rate: 12%. 4. Storage cost...

Q: In March 2018, six-month bitcoin futures were priced at

In March 2018, six-month bitcoin futures were priced at $7,925. The spot price was $7,946. The six-month interest rate was 1.92%. a. What was the convenience yield? b. Is your answer to part (a) consi...

Q: In September 2020, swap dealers were quoting a rate for five

In September 2020, swap dealers were quoting a rate for five-year euro interest-rate swaps of 4.5% against Euribor (the short-term interest rate for euro loans). Euribor at the time was 4.1%. Suppose...

Q: Look at Table 27.1. a. How many

Look at Table 27.1. a. How many Japanese yen do you get for your dollar? b. What is the three-month forward rate for yen? c. Is the yen at a forward discount or premium on the dollar? d. Use the one-y...

Q: New-model commercial airplanes are much more fuel-efficient than

New-model commercial airplanes are much more fuel-efficient than older models. How is it possible for airlines flying older models to make money when its competitors are flying newer planes? Explain b...

Q: In March 2017, the exchange rate for the Narnianleo was L2

In March 2017, the exchange rate for the Narnianleo was L2,419 = $1. Inflation in the year to March 2018 was about 30% in Narnia and 2% in the United States. a. If purchasing power parity held, what...

Q: In December 2017, an American investor buys 1,000 shares

In December 2017, an American investor buys 1,000 shares in a Mexican company at a price of 500 pesos each. The share does not pay any dividend. A year later she sells the shares for 550 pesos each. T...