Solution Library

Determining Futures Prices with Bonds maturing at different times and with different coupon rates

Question The futures price for the June 17, 2009 CBOT bond futures contract is 118-23. 1.    Calculate the conversion factor for a bond maturing on Jan 1, 2025, paying a coupon rate of 9.5%. 2.    Calculate the conversion factor for a bond maturing on Oct 1, 2030, pay ... Read More

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Calculation of Interest Rate Swap in return for LIBOR

Question Under the terms of an interest rate swap, a financial institution has agreed to pay 10% per annum and to receive the 3-month LIBOR in return on a notional principal of $50 million with payments exchanged every 3 months. The swap has a remaining life of 14 months. The current rate being swa ... Read More

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Is foreign exchange risk systematic? What are the implications of corporate hedging policy with respect to foreign exchange risk?

Question Is foreign exchange risk systematic? What are the implications of your answer regarding corporate hedging policy with respect to foreign exchange risk? In your answers make sure to discuss the possibility of divergent views on this issue between management and shareholders.    S ... Read More

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Do you think investors should try to diversify their domestic investment portfolios by including international assets in it?

Question Do you think investors should try to diversify their domestic investment portfolios by including international assets in it? Why/why not? What is the best way to achieve the benefits (if any) of international portfolio diversification without bearing the associated costs?    ... Read More

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Financial Manager Assessing political risk in project in foreign country

Question Explain how a financial manager should account for political risk when considering a project in a foreign country. Assume that the financial manager works for a multinational firm with presence in many different countries. Summary The question belongs to Finance and it is about the influ ... Read More

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Calculate Unit Price of Product and NPV for a New Project

Question HGK, a Thai firm, is considering starting production of high-def TVs in its U.S subsidiary for sale in the U.S. The project has a 4-year life and requires an initial investment of $6,000,000 in equipment. The equipment is to be depreciated (to zero) on a straight line basis and is expected ... Read More

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Choosing an investment strategy by calculating the cash inflows

Question Faulpeltz Gmbh is a German subsidiary of Lazy Ltd., a British MNC. Faulpeltz is considering a 5-year project in Germany that requires an initial investment of 1,360 million Euros (EU). The project will generate cash flows of EU 450 million per year in the years 1 to 4 and EU 575 million at ... Read More

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Calculating the Present Value of Shares and Currency

Question At the end of 2011 you bought 25000 shares of a Mexican stock at a price of 220 peso/share. At that time the spot exchange rate was 0.2458$/peso. Nine months later, you sold these shares for 240.5 peso/share.  If your annualized US-$ rate of return on that investment was 21.5%, what w ... Read More

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Calculating the Exchange rate between currencies after taking into account inflation

Question Toshiyuki Matsukawa is production manager for Tanaka Chemicals, a Japanese chemical manufacturer operating throughout Asia. He is considering a proposal to build a chemical plant in Thailand to service the growing Southeast Asian market. The project information is as follows: The exchange ... Read More

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Essay on Personal or Individual Investment Portfolio

Question Write an essay of about 3000 words by analyzing your own situation and risk profile (character, life-style, time horizon, objectives, etc), then reflect this is a portfolio of funds or ETF using the examples. Before selecting the investment vehicles you will need to determine your asset al ... Read More

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Personal Investment Portfolio: Analysis for Post Retirement Income Scheme

Question Suppose you have reached retirement. You have saved a good amount of money, say EUR 500,000, but, if you wish to take a currency and an amount more realistic for your country, please do so. You are now to make a comparison between two approaches to using your wealth to see you through reti ... Read More

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What is the Mixture of Debt and Equity for operations and what Decisions include in Working Capital Management?

Question 1.  The mixture of debt and equity used by a firm to finance its operations is called: a.    Working capital management. b.    Financial depreciation. c.    Cost analysis. d.    Capital budgeting, capital structure 2. Worki ... Read More

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