# financial derivative and risk management homework help

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• Q1:Description Your company international operations, one in the UK, a second one in Germany and third one in China. Management in the home country (USA) argues that economic exposure is too complicated to manage and not worth the resources used given the four currencies in the mix. Agree? Why? Why not? Your discussion should be about one page. You should respond to posting of at least one student. You should discuss this issue further with your group members. We shall discuss this issue at the beginning of class in Week 5. Bring a list of your points to class.See Answer
• Q2:Problem 3) Discuss how developing a communication strategy when interacting with stakeholders may change based on the type of stakeholder being targeted. Explain:See Answer
• Q3:Problem 4) A project has four different stakeholders (A, B, C, and D). Each of them has the following possible outcomes based on whether they decide to impede the project (e.g., litigation, refusal to proceed).See Answer
• Q4:If a person's certainity equivalent for the lottery (Ð„10, 0.3; Ð„100, 0.2) is Ð„120, then what is that person's risk attitude?See Answer
• Q5:X-Co's bond has a coupon rate of 6%/year payable semiannually. The bond is currently selling for 99 and has 10 years to maturity, A) Is its market rate > or < 6%? B) Is the market rate a lot or a little > or < 6%? Note: “>” is greater than and “<” is less than. 1. 2. X-Co is offering a unique perpetual bond that will pay \$30 next year, and the \$30 will grow at 1.0%/year in the future. If the market rate is 4.15%/year, what is its current market price? 3. Last year X-Co's sales fell 10%, but its net profit fell 69%. In a few words, what is the most likely explanation for this disparity?See Answer
• Q7:A. A company has a \$20 million portfolio with a beta of 1.2. It would like to use futures contracts on the S&P 500 to hedge its risk. The index futures currently stand at 1080, and each contract is for delivery of \$250 times the index. What is the hedge that minimises the risk? What should the company do if it wants to reduce the portfolio's beta to 0.6? B. An airline executive has argued: "There is no point in our using oil futures. There is just as much chance that the price of oil in the future will be less than the futures price as there is that it will be greater than this price". Discuss the executive's viewpoint. b. Does a perfect hedge always lead to a better outcome than an imperfect hedge? Explain your answer.See Answer
• Q8:Marking Criteria: This also forms the structure of your assignment document: Section Executive summary Introduction Establishing the context Risk criteria Communication and consultation Criteria Capture the essence of findings Define scope, boundaries, and objectives clearly Identify all relevant stakeholders and constraints Define rules, roles and responsibilities, etc Explain processes and tools Define risk criteria and provide a quantified Tolerability of Risk (ToR) table Provide consultation and communication strategies Weight 5 5 5 5 5 10 10See Answer
• Q11:1. What steps did Boeing take in risk analysis in the development of the 737 MAX? What steps should they have taken? (5 pts) 2. What specific steps would you take to improve the company culture to focus on safety? (3 pts) 3. Did Boeing do a good job of communicating risk? How could they have improved? (3 pts) 4. Using the Capabilities Approach, how can you justify the risk of replacing aircraft in a fleet with the Boeing 737 MAX (pre- and post-first crash)? (4 pts)See Answer
• Q12:1. Portfolio Beta =1.17 Ch 02: End-of-Chapter Problems - Risk and Return: Part I Back to Assignment Attempts Keep the Highest/1 2. Problem 2-02 (Required Rate of Return) Required Rate of Return AA Corporation's stock has a beta of 0.4. The risk-free rate is 2%, and the expected return on the market is 12%. What is the required rate of return on AA's stock? Do not round intermediate calculations. Round your answer to one decimal place. Grade it Now Save & Continue Continue without savingSee Answer
• Q13:1. (30 marks) Module 5 related Go to the Tesla Inc. website, or another source, and find the most recent six years of financial statements from their annual reports. Present in a table and a graph the dollar amounts for Revenue, Cost of Goods Sold, Research and Development Expenses, and Earnings Before Tax. Also, calculate the C of GS / Revenue ratio, the R & D / Revenue ratio, and EBT / Revenue ratio for each year. a. Do you see a pattern for revenue over the last six years? Explain. b. c. Do you see a pattern for the C of GS and R&D expenses over the last six years? Explain. Look at the three ratios you have calculated. What do you observe? Have they changed over time? Are they getting better or worse? Explain.See Answer
• Q14:2. (30 marks) Module 6 related The following information is taken from recent annual reports and 10-K filings of six publicly traded retailers. All financial information is in \$ Millions. Required a. Compute the Inventory turnover ratio and days inventory outstanding for each company. b. Compute the gross profit margin for each company. c. Based on your calculations above, how would you rank the performance of the six companies? Explain. d. Although all six firms are retailers, it could be argued that they exist in different market spaces. Group them into three groups of two similar competitors. Identify what the three sub industries are that you have chosen. Does this affect your analysis from part (c)? e. Compute the following non-financial ratios for each company: Revenue per square foot and revenue per store. What do you observe? f. For each of the three groups which competitor would you consider is doing better? Explain. See Answer
• Q15:3. (30 marks) Module 7 related From your textbook, Financial Statement Analysis and Valuation 6th edition, complete the following: E7-41 and E-42. Bonus: for E7-41 see if you can find an updated credit rating for the Xerox Corporation after the one in 2018 referred to in the question. Has their credit rating gone up or down? Why?See Answer
• Q16:4. (10 marks) Short Essay Question Assume you are the CEO of a company that intends to issue \$20 M in new bonds to help finance an expansion of your manufacturing facilities. A new employee eager to catch the ear of the CEO suggests that by lowering the coupon rate of interest on the bond you will be able to reduce interest payments on the debt, and therefore interest expense on the Income Statement, thus increasing overall profitability. Is the rationale for this suggestion a good one? Explain.See Answer
• Q17:Assuming that the values at the consequence nodes in the decision tree in Figure 1 below are utility values, use the roll-back technique to find theSee Answer
• Q18:2. X-Co is offering a unique perpetual bond that will pay \$30 next year, and the \$30 will grow at 1.0%/year in the future. If the market rate is 4.15%/year, what is its current market price?See Answer
• Q19:3. Last year X-Co's sales fell 10%, but its net profit fell 69%. In a few words, what is the most likely explanation for this disparity?See Answer
• Q20:4. A) Draw a timeline for a bullet bond, face value of \$1,000, with 2 years remaining to maturity that pays a coupon rate of 4%/year semi-annually. B) What is its market price if its market rate is 5%?See Answer

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