Questions from Corporate Finance

Q: What is the purpose of trading zones? What are some of

What is the purpose of trading zones? What are some of the most important zones for world trade?

Q: What is the difference between a direct and an indirect placement of

What is the difference between a direct and an indirect placement of commercial paper?

Q: Can a public firm with a lower-than-prime credit

Can a public firm with a lower-than-prime credit rating issue commercial paper?

Q: Consider the same 3-year oil swap. Suppose a dealer

Consider the same 3-year oil swap. Suppose a dealer is paying the fixed price and receiving floating. What position in oil forward contracts will hedge oil price risk in this position? Verify that the...

Q: Use a change of numeraire and measure to verify that the value

Use a change of numeraire and measure to verify that the value of a claim paying ST if ST

Q: Let S = $100, σ = 30%, r =

Let S = $100, σ = 30%, r = 0.08, t = 1, and δ = 0. Suppose the true expected return on the stock is 15%. Set n = 10. Compute European call prices, ∆, and B for strikes of $70, $80, $90, $100, $110, $1...

Q: Make the same assumptions as in the previous problem. a

Make the same assumptions as in the previous problem. a. What is the 9-month forward price for the stock? b. Compute the price of a 95-strike 9-month call option on a futures contract. c. What is the...

Q: Repeat the previous problem for a 40-strike 180-day

Repeat the previous problem for a 40-strike 180-day put. Repeat the previous problem Consider a 40-strike 180-day call with S = $40. Compute a delta-gamma-theta approximation for the value of the call...

Q: Repeat the previous problem for up-and-out puts assuming

Repeat the previous problem for up-and-out puts assuming a barrier of $44. Previous Problem Let S = $40, K = $45, σ = 0.30, r = 0.08, δ = 0, and T = {0.25, 0.5, 1, 2, 3, 4, 5, 100}. a. Compute the pr...

Q: Consider the equity-linked CD in Section 15.3.

Consider the equity-linked CD in Section 15.3. Assuming that profit for the issuing bank is zero, draw a graph showing how the participation rate, γ , varies with the coupon, c. Repeat assuming the is...