Answer:
Please see explanation
Explanation:
To answer the given question, first we will calculate the theoretical future price which shall be determined using continuous compounding formula as follows:
Theoretical future price=400*e^(10%-4%)*4/12
=$408.08
The actual future price of a contract deliverable in 4 months is only $405 which means that the index future price is too low in relation to the index.
The suitable arbitrage strategy shall be:
1. to purchase the future contracts
2.Short sale the shares which are underlying the index
Answer:
d. 12.72%
Explanation:
To calculate the expected return on the market, we will use the Capital asset pricing model (CAPM) equation.
The CAPM allows to relate the risk-free rate of return (RFROR), the market risk premium, the beta of an asset and the expected return of this asset.
Expected return = risk-free ROR + (Beta*Market risk premium)
In this case we know all the parameters but the Market risk premium (MRP), so we have:
We also know that the beta of the market, by definition, is equal to one. So now that we know the market risl premium we can calculate the expected return on the market:
The expected return on the market is 12.72%.
Answer:
The answer is quantified and measurable.
Explanation:
Goals need to be quantified and measurable in effective marketing planning. To determine what needs to be accomplished and when, we must put figures to it. This makes performance measurement easier where variances at the end can be analysed.
For example, one of the marketing goals for bank A might be to onboard 100 new customers every month for a year after the launching of its new mobile app.
This example is quantified and can be measured every month.
D. making profits on sales
Answer:
payback period is 5 years, 11 months
Explanation:
Payback Period is the length of time for the Total Cash flows to equal the initial capital Investment
Cash Flows Project
Year 0 (1,520,000)
Year 1 325,000
Year 2 270,000
Year 3 235,000
Year 4 235,000
Year 5 235,000
Calculation of years
Payback period = 5 years (Total inflows are 1,300,000)
Calculation of months
Payback period = Remaining Amount/Net Cash flow in Next Month × 12
= (1,520,000-1,300,000)/235,000 × 12
= 220,000/235,000 × 12
= 11
Therefore payback period is 5 years 11 months
