Topic 1: Financial Markets 1. (a) From the viewpoint of the market maker: On the 4,000 shares: (4,000*102 1/2) – (4,000*102 1/4) = $1,000 Value of the inventory at the end of the day: (-6,000*102 1/4) = -$613,500 -Inventory is priced as the cost of goods sold, so the -6,000 shares are priced at the bid, at which the market maker bought the shares. (b) Profit from day 1: (6,000*102 1/2) = $615,000 -6,000 additional shares were sold day 1 at the ask price of 102 1/2; therefore, the profit from
Words: 697 - Pages: 3
| | | | MULTIPLE PAYMENT | | ANNUITIES | PERPETUITIES | EFFECTIVE ANNUAL RATE Periodic Compounding | Continuous Compounding | M = times compounded in the year, APR = Annual Percentage Rate (annual quoted rate) | HOLDING PERIOD RETURN Buy investment at price V(0), reinvest all cash flows until period T, sell investment and reinvested cash flow for V(T). V(T) = ending prince + cash dividend | INTERNAL RATE OF RETURN (calculator input) Initial Capital Contribution |
Words: 307 - Pages: 2
Solutions to Homework 3, FINC-UB.0002.02 Xuyang Ma Topic 6: Equity Valuation 1. Suppose that the consensus forecast of security analysts of your favorite company is that earnings next year will be E1 = $5.00 per share. Sup- pose that the company tends to plow back 50% of its earnings and pay the rest as dividends. If the Chief Financial O cer (CFO) estimates that the company's growth rate will be 8% from now onwards, answer the following questions. (a) If your estimate of the
Words: 2597 - Pages: 11
Foundations of Finance: The Capital Asset Pricing Model (CAPM) Prof. Alex Shapiro Lecture Notes 9 The Capital Asset Pricing Model (CAPM) I. II. III. IV. V. VI. Readings and Suggested Practice Problems Introduction: from Assumptions to Implications The Market Portfolio Assumptions Underlying the CAPM Portfolio Choice in the CAPM World The Risk-Return Tradeoff for Individual Stocks VII. The CML and SML VIII. “Overpricing”/“Underpricing” and the SML IX. X. Uses of CAPM in Corporate Finance
Words: 1605 - Pages: 7
money is spent in nonprofit are essential to help finance managers and leaders understand how the organization operated in the context of current economic situation and to give a general quantitative analysis in terms of activities and programs executed by organizations. Knowing how finance and budget management looks like in nonprofits is also key to distinguish with for- profit organizations. This critique will start with the functions of finance management in the nonprofits and why we need to be
Words: 1754 - Pages: 8
Omega Health Foundation Finances play a major role in part of decision-making of any industry that can have a conclusive affect on the processes of the business. Most health care organizations have significant changes within the industry; this is specifically because there are new trends available in the market industry which are impacted by the finance organization and the decisions that must be made. Most of the decisions within the health care industry are primarily reliant on the demand for
Words: 979 - Pages: 4
accounting, consult your accounting instructor for more information). Finance: The financial manager or consultant places primary emphasis on decision making. It uses the financial statements prepared by accountants to make decisions about the firm’s financial condition and to advise others about possible losses and profits. In some cases, finance is more a type of leadership position. A financial manager has to deal not only with finance, but also with economics, accounting, statistics, math, and management
Words: 632 - Pages: 3
Why is Finance so Important to a business? Finance is a crucial part of a start-up business; it is the cornerstone to determine whether or not your business will jump over the first hurdle. Without sufficient finance, a business has a very low risk of surviving the first stage of development. Finance can be important for various activities throughout the business starting with the purchasing of stock. If you are providing a product you will most likely need raw materials, if not then you will need
Words: 2159 - Pages: 9
important vehicles of poverty reduction strategy. For the first time, the comprehensive Industrial Policy 2005 highlighted SME development as a flagship policy area for balanced and sustainable industrial development in Bangladesh. Availability of finance is thought to be a major constraint to formation and growth of SMEs in Bangladesh. Banks are reluctant to expand their SME credit portfolio because they do not consider SME lending an attractive and profitable undertaking. This is so because SMEs
Words: 4586 - Pages: 19
award scholarship to researchers and scholars at home and abroad. The DBBL formally launched its operation in the country on June 3, 1996, and have been involved in philanthropic and social activities since then. It established Dutch-Bangla Bank Foundation (DBBF) in June 2001 to conduct humanitarian activities including rehabilitation of the destitute. The bank has so far taken various Corporate Social Responsibility (CSR) programmes including scholarship programme for the meritorious and needy
Words: 3110 - Pages: 13
