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1 year ago

6

A customer buys a $1,000 par reverse convertible note with a 1 year maturity and a 6% coupon rate. At the time of purchase, the

reference stock is trading at $50 and the knock-in price is set at $40. If, at maturity, the reference stock is trading at $25, the customer will receive: __________.

1 answer:

USPshnik [31]1 year ago

3 0

Answer:

As the knock-in was reach, it will receive the original investment plus the coupon yield: 1,060

Explanation:

<u>At maturity</u>

Because the knock-in was achieved, the customer can pick to recieve stock or cash

when the contract was made, the stock price was 50 so 1,000 are equivalent to:

1,000 / 50 = 20 shares

we multiply this by the market price.

20 x 25 = 500

between 500 in stocks and 1,000 in cash it will prefer 1,000

Then, the interest will be:

1,000 x 6% = 60

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You are exploring a career in nursing in the state of MA. The average hourly wage for a RN is $33.37. You are planning to work 4

yawa3891 [41]

Answer:$1,735.24

half is 1.5

40 regular hours * $33.37 = $1334.8

8 overtime hours * (1.5 * $33.37) = $400.44

$1334.8 + $400.44 = $1735.24

6 0

2 years ago

Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and fa

yaroslaw [1]

Answer:

You are missing the requirements. I looked them up and found the following:

Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Standard Costs Actual Costs

Direct materials 185,000 lbs. at $6.00 183,200 lbs. at $5.80

Direct labor 18,500 hrs. at $16.50 18,930 hrs. at $16.90

Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 19,310 direct labor hrs.:

Variable cost, $3.10 $56,780

variable cost Fixed cost, $4.90 $94,619 fixed cost

Each unit requires 0.25 hours of direct labor

direct materials price variance = AQ x (AP - SP) = 183,200 x ($5.80 - $6) = -$36,640 favorable variance

direct materials quantity variance = SP x (AQ - SQ) = $6 x (183,200 - 185,000) = -$10,800 favorable variance

total direct materials cost variance = (AQ X AP) - (SQ X SP) = (183,200 X $5.80) - (185,000 X $6) = $1,062,560 - $1,110,000 = -$47,440 favorable variance

or

total direct materials cost variance = direct materials price variance + direct materials quantity variance = -$36,640 - $10,800 = -$47,440 favorable variance

4 0

2 years ago

Your uncle holds just one stock, East Coast Bank (ECB). You agree that this stock is relatively safe, but you want to demonstrat

g100num [7]

Complete question:

Assume that your uncle holds just one stock, East Coast Bank (ECB), which he thinks has very little risk. You agree that the stock is relatively safe, but you want to demonstrate that his risk would be even lower if he were more diversified. You obtain the following returns data for West Coast Bank (WCB). Both banks have had less variability than most other stocks over the past 5 years.

Year ECB WCB

2004 40.00% 40.00%

2005 -10.00% 15.00%

2006 35.00% -5.00%

2007 -5.00% -10.00%

2008 15.00% 35.00%

a. What is the expected return and risk of each stock?

b. Measured by the standard deviation of returns, by how much would your uncle's risk have been reduced if he had held a portfolio consisting of 60% in ECB and the remainder in WCB? In other words, what is the difference between portfolio's standard deviation and weighted average of components' standard deviations? (Hint: check the example on page 11-12 on my note).

Solution:

The estimated return of the stock is the average profit.

So the average of ECB is (40-10+35-5+15)/5

= $\frac{75 percent}{5}$

= 15% expected return

WCB expected return = 40+15-5-10+35

= $\frac{75 percent}{5}$

= 15%

They've had the same planned return.

This is generally defined in the Greek letter Mu, (U) A weighted average may also be used to calculate portfolio volatility.

Standard deviation of ECB is $\sqrt{{ sum [(x-U)^2]/5}}$

so for ECB:

$(40-15)^2$ = $25^2$ =6.25%

$(-10-15)^2$ = $-35^2$ = 0.1225

$(35-15)^2$ = $20^2$ = 0.04

$(-5-15)^2$ = $-20^2$ = 0.04

$(15-15)^2$ =0

now 0.0625+0.1225+0.04+0.04+0=0.265

stdev= $\sqrt{(0.265/5)}$ = 0.23

So WCB is the same except in a different order to make things quick I'm only going to add the median again WCB=0.23

Then the 60/40 portfolio will be the "weighted average" of the returns.

portfolio returns

2004: (60%*40%)+(40%*40%) = 40%

2005: (60%*-10%)+(40%*15%) = 0%

2006: (60%*35%)+(40%*-5%) = 19%

2007: (60%*-5%)+(40%*-10%) = -7%

2008:(60%*15%)+(40%*35%) = 23%

we have an average return of (40+19-7+23)/5 = 75/5 =15%

The estimated return of all combined stocks is a better way to do so.

we knew they both had expected returns of 15% so we can say

(60%*15%)+(40%*15%)=15% so the portfolio has an expected return of 15%

Now we do the standard deviation for the whole portfolio and get

$(40-15)^2$ = $25^2$ =6.25%

$(0-15)^2$ = - $25^2$ =6.25%

$(19-15)^2$ = $4^2$ = 0.16%

$(-7-15)^2$ = $-22^2$ = -4.84%

$(23-15)^2$ = $8^2$ = 0.64%

now add them up and get 9.78%

$\sqrt{(9.78%/5)}$ = 13.98%

Therefore, the normal portfolio variance is 13.98 per cent and the predicted portfolio return is 15 per cent.

Every stock has a standard deviation of 23 per cent and an average return of 15 per cent, meaning that the fund has the same estimated return but with less standard deviation. This ensures that the same gain is less costly. It's stronger than any of these products.

5 0

2 years ago

Diana can either invest $20,\!000$ dollars for $4$ years with a simple interest rate of $6\%$ or an interest rate of $7\%$ which

Verizon [17]

Answer:

$34,243.28

Explanation:

Simple interest = P x r x t

where:

P = Principal

r = rate

T = time

Therefore simple interest = 20,000 x 6% x 4 = $4,800

Compound Interest = ((P*(1+r)^n) - P),

where P is the principal,

r is the annual interest rate = 7%, and

n is the number of periods = 4 years x 4 quarters a year.

Therefore compound interest = ((20000 (1+0.07)^16)-20000) = $39,043.28

Difference in interest = $39,043.28 - $4,800 = $34,243.28

6 0

2 years ago

Read 2 more answers

The seabury Corporation has a current ratio of 3.5 and an acid-test ratio of 2.8. The Corporations current assets consist of cas

SVETLANKA909090 [29]

Answer:

The correct answer is A

Explanation:

The current liabilities is computed as:

Current Assets (CA) = Quick assets (QA)+ Inventory (I)

CA = QA + $49,000

Acid test ratio = Quick assets / Current Liabilities (CL)

2.8 = QA / CL

QA = 2.8 × CL

Current Ratio (CR) = CA / CL

3.5 = CA / CL

Putting CA = QA + Inventory

3.5 = ( QA + $49,000) / CL

Now, Putting QA = 2.8 × CL

So,

3.5 = [( 2.8 × CL ) + $49,000] / CL

3.5 = 2.8 CL / CL + $49,000 / CL

3.5 = 2.8 + ($49,000 / CL)

3.5 - 2.8 = $49,000 / CL

0.7 = $49,000 / CL

CL = $49,000 / 0.7

CL = $70,000

4 0

2 years ago