Financial literacy

You would like to be holding a protective put position on the stock of XYZ Co. t

You would like to be holding a protective put position on the stock of XYZ Co. to lock in a guaranteed minimum value of $108 at year-end. XYZ currently sells for $108. Over the ne…

You would like to borrow money three years from now to build a new building. In

You would like to borrow money three years from now to build a new building. In preparation for applying for that loan, you are in the process of developing target ratios for your…

You would like to buy a house that costs $ 350,000. You have $ 50,000 in cash th

You would like to buy a house that costs $ 350,000. You have $ 50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank i…

You would like to buy a house that costs $350,000. You have $50,000 in cash that

You would like to buy a house that costs $350,000. You have $50,000 in cash that you can put down on the house, but you need to borrow the rest of the purchase price. The bank is …

You would like to buy a new computer. You see in a magazine advertisement that y

You would like to buy a new computer. You see in a magazine advertisement that you can get a new 2.4 GHz Athlon computer system for $1,600. Alternatively, the ad says you can leas…

You would like to buy a new computer. You see in a magazine advertisement that y

You would like to buy a new computer. You see in a magazine advertisement that you can get a new 2.4 GHz Athlon eight-core computer system for $1,600. Alternatively, the ad says…

You would like to buy a share of XYZ Company common stock. Dividend information

You would like to buy a share of XYZ Company common stock. Dividend information on the company is as follows: XYZ declared a .50 cents per share dividend today. They anticipate ex…

You would like to establish a trust fund that will provide $120,000 a year forev

You would like to establish a trust fund that will provide $120,000 a year forever for your heirs. The trust fund is going to be invested very conservatively so the expected rate …

You would like to estimate the weighted average cost of capital for a new airlin

You would like to estimate the weighted average cost of capital for a new airline business. Based on its industry asset beta, you have already estimated an unlevered cost of capit…

You would like to estimate the weighted average cost of capital for a new airlin

You would like to estimate the weighted average cost of capital for a new airline business. Based on its industry asset beta, you have already estimated an unlevered cost of capit…

You would like to have $1,000,000 in savings as of the day you retire exactly 40

You would like to have $1,000,000 in savings as of the day you retire exactly 40 years from now. Beginning one year from today, you plan to deposit an equal amount in a mutual fun…

You would like to have $3,000 in 4 years for a special vacation following gradua

You would like to have $3,000 in 4 years for a special vacation following graduation by making deposits at the end of every six months in an annuity that pays 3.5% compounded semi…

You would like to have $4,000 in 4 years for a special vacation following gradua

You would like to have $4,000 in 4 years for a special vacation following graduation by making deposits at the end of every six months in an annuity that pays 6% compounded semian…

You would like to have $50,000 plan to deposit each year an equal sum in the ban

You would like to have $50,000 plan to deposit each year an equal sum in the bank, which will earn 2%, compounded annually. Your first payment will be made at the end of the year.…

You would like to have 45,00 in 11 years. To accumulate this you plan to deposit

You would like to have 45,00 in 11 years. To accumulate this you plan to deposit an equal amount each year which would earn 5% interest compounded. The first payment will be made …

You would like to have an annual $120,000 income generated from your retirement

You would like to have an annual $120,000 income generated from your retirement fund one year after your 65-year old birthday for 30 years. You are exactly 25 years old now and yo…

You would like to have enough money saved to receive $200,000 per year after ret

You would like to have enough money saved to receive $200,000 per year after retirement so that you and your family can lead a good life for 30 years (from age 65 to 95). You will…

You would like to have enough money saved to receive a growing annuity for 20 ye

You would like to have enough money saved to receive a growing annuity for 20 years, growing at a rate of 5% per year, with the first payment of 50,000 occurring exactly one year …

You would like to have the contract that gives you the right, but not the obliga

You would like to have the contract that gives you the right, but not the obligation, to buy a stock of General Motors at a specified price. You should: A) sell a call option on s…

You would like to invest $20,000 for a year in a risk-free investment. A convent

You would like to invest $20,000 for a year in a risk-free investment. A conventional CD offers a 4.6% annual rate of return. You are also considering an “Inflation-Plus” CD which…

You would like to sell 120 shares of Xenith Bankshares, Inc. (XBKS). The current

You would like to sell 120 shares of Xenith Bankshares, Inc. (XBKS). The current ask and bid quotes are $4.16 and $4.12, respectively. You place a limit sell order at $4.15. If th…

You would like to sell 290 shares of Echo Global Logistics, Inc. (ECHO). The cur

You would like to sell 290 shares of Echo Global Logistics, Inc. (ECHO). The current ask and bid quotes are $15.58 and $15.53, respectively. You place a limit sell order at $15.57…

You would like to use a two-factor model to evaluate the performance of an activ

You would like to use a two-factor model to evaluate the performance of an actively managed mutual fund, the Hyperactive Fund. You have historical monthly excess returns that an i…

You write a put with a strike price of $45 on stock that you have shorted at $45

You write a put with a strike price of $45 on stock that you have shorted at $45 (this is a “covered put”). What are the expiration date profits to this position for stock prices …

You write a put with a strike price of $50 on stock that you have shorted at $50

You write a put with a strike price of $50 on stock that you have shorted at $50 (this is a “covered put”). What are the expiration date profits to this position for stock prices …