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What are derivatives? How can derivatives be used to reduce risk? Can derivatives be used to increase risk? Explain
Basic Finance, Finance
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A company recently had 26 million shares outstanding trading at $45/share. The company announces its intention to raise $290M by selling new shares. What price shoukd the company expect its existing shares shares to sell ...
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What is the 5% VaR (in terms of holding period return) for a portfolio with normally distributed returns, a mean return of 20%, and a standard deviation of returns of 40%?
Choose an industry, and consider what and how it can hedge in its favor. Introduce the industry, and state what it might hedge, and why. Explain what you would do if put in charge of the decision to hedge or not.
Question - Suppose that the number of ounces of soda put into a soft-drink can is normally distributed with µ = 12.05 ounces and s = 0.03 ounce. a. Legally, a can must contain at least 12 ounces of soda. What fraction of ...
A study finds that the prices of stocks prior to large dividend increases show on average consistently positive abnormal returns. Is this a violation of the efficient market hypothesis? Explain.
Consider a currency swap for $10 million and SF 15 million. One party pays dollars at a fixed rate of 9%, and the other pays Swiss francs at a fixed rate of 8 percent. The payments are made semiannually based on the exac ...
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