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bulgar [2K]
3 years ago
14

A customer has a broadly diversified stock portfolio with a current market value of $2,500,000. The customer wishes to hedge the

portfolio against a market decline. The customer should:________
A. sell short the exact same stock positions as those held in the portfolio
B. sell 100 SPX 2500 Calls
C. buy 100 SPX 2500 Puts
D. sell long the exact same stock positions as those held in the portfolio
Business
1 answer:
Mars2501 [29]3 years ago
8 0

Answer:

C) buy 100 SPX 2500 Puts

Explanation:

SPX stock is based on the Standard and Poor's stock index, so if the investor is worried about a market decline, if he purchases put options and the marker declines, he/she will actually earn money. Each SPX 2500 contract covers approximately $250,000 of portfolio value, so if the investor purchases 10 put options then the whole portfolio would be covered.

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On January 1, 2021, Clark Corporation sold an $800,000, 7% bond issued for $767,320. The bonds are to pay interest quarterly and
serg [7]

Clark Corporation's total cost of borrowing $800,000, 7% bonds issued for $767,320 for 5 years is $344,702.87.

<h3>What is the total cost of borrowing?</h3>

The total cost of borrowing includes the bond discounts and the interest expenses.

In this case, the total cost of borrowing is $344,702.87.  However, this is only the pre-tax cost.

<h3>Data and Calculations:</h3>

Face value = $800,000

Interest rate = 7%

Bonds proceeds = $767,320

Bonds discounts = $32,680 ($800,000 - $767,320)

Maturity period = 5 years

Market rate = 8%

Interest payment = quarterly

Quarter interest expense = $14,000 ($800,000 x 7% x 1/4)

N (# of periods) = 20 (5 x 4)

I/Y (Interest per year) = 8%

PMT (Periodic Payment) = $14,000 ($800,000 x 7% x 1/4)

FV (Future Value) = $800,000

<u>Results:</u>

PV = $767,297.13

Sum of all periodic payments = $280,000 ($14,000 x 20)

Total Interest = $312,702.87

Total cost of borrowing = $344,702.87 ($32,680 + $312,702.87)

Thus, Clark Corporation's total cost of borrowing $800,000, 7% bonds issued for $767,320 for 5 years is $344,702.87.

Learn more about the total cost of borrowing at brainly.com/question/25599836

6 0
2 years ago
A firm has $76,000,000 in debt, which accounts for 43% of their total funds raised; the after-tax cost of these funds is 6.10%.
Digiron [165]

11.55% is the weighted average cost of capital for these funds

Explanation:

Firm has 76000000 in debt and 100000000 in equity. Thus the proportion of debt =

             = 76000000/(76000000 + 100000000)

             = 43.18%

and proportion of equity =  1 - 43.18%  = 56.82%

Therefore, WACC =  0.4318 * 6.1 + 0.5682 * 15.7

                               = 11.55%

7 0
3 years ago
Amanda doesn't know what it means to implement a CSR<br> strategy. What do you tell her?
Anastasy [175]

<u>Explanation:</u>

All the business enterprise should involve in doing community service.  CatsCafé in Ontario can enjoy the benefits of CSR activities. Activities that are possible with the available resources at cafe can be used to perform CSR such as donating food to the underprivileged.

You can make CSR as an regular day to day activity at a cafe. When there is excess food cooked for any event or party orders need not be wasted instead can be donated for people in need.

Communication is a key to involve all the 16 employees of the cafe into CSR activities. Employee support through volunteering is important to perform CSR.

As it is a united mission this brings unity among the employees. When information spreads to outsiders they join hands for CSR and the brand image of Cafe will improve in local society.

Promote CSR activities with images and posters of employees volunteering in these activities will increase visibility of the Cafe.

6 0
3 years ago
A(n)_____a0 is a misunderstanding; a mistaken thought or idea.
lara31 [8.8K]

Answer: misconception

Explanation:

A misconception is simply a misunderstanding, a mistaken thought or idea. Misconception is an opinion or a view by s person which is incorrect based on the faulty thinking of the person.

For example, Jane will finish high school the following year and therefore, won't need to further her education. This is an example of misconception.

5 0
3 years ago
If you were to log onto www.census.gov and click on​ "Foreign Trade," then click on​ "Statistics," and finally on​ "State Export
Helga [31]

Answer:

A. ​No, because of​ NAFTA, you would expect the export of goods to Canada and Mexico to be substantial.

Explanation:

Even though exists a lot of debate surrounding the benefits of NAFTA to the US, trade agreements tend to increase more than proportionally the commercial exchange between parties. In this case, Canada and Mexico are both parts of NAFTA, so being the most important commercial partners of Ohio should not be a surprise.

8 0
3 years ago
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