• • • • The
...and 10-year average stock price is $21.17. Therefore, the chance that the value of option is greater than the cash compensation is very rare. The options will even worth nothing to Ms. Jameson if the stock price is below $35 at the maturity date.
If Sally holds options until maturity, she should choose cash compensation.
Second scenario Because, Ms. Jameson is free to sell options at any time after her joins Telstar, she may sell her option immediately after receiving (at the time that the value of option is greatest) We price the value of stock option by using Black and Schole’s Model and compare it with cash compensation of $5,000.
[pic] and [pic]
S0 = 18.75 K = 35 T = 5 (refer in case)
rf = 6.02% (use 5 year T-bond yield, which match with time to maturity of the option)
For volatility, we calculate both historical volatility and implied volatility.
(1) Historical volatility : calculate from historical stock returns for 10 years.
V = 0.3687 or 36.87%
V comes from: The return of stocks = ln(stock priceT/stock priceT-1
Standard deviation of stock return = 0.023 per day,
Convert to per annum = [pic] (253 = number of trading days per annum)
So, V = 0.3687 or 36.87%
Put variables into the equation
[pic] ; [pic]
Hence, by using historical volatility, we get the price of call option at $4.07 per option. There are 3,000 call options,...
...registered at the Ministry of Justice practice (particularly in Vietnams Ministry of Finance). Socially independent auditors have no common interests, no relationship with the audited firm. The work of independent external auditor Check the legality and validity of the documents, accounting data, the execution of policies, accounting practices, financial statement. Check and confirm the level of honesty and reasonableness of the financial statement by the accounting units created. Check and confirm the value of the equity of the joint venture parties, shareholders, verify the truthfulness, accuracy and completeness of the accounting data and financial statement of joint venture, dissolution, merger, split, equitization, bankruptcy and other cases prescribed by law. Assess finance , accounting and consulting services to financial management, accounting and tax at the request of customers The role of independent external auditor Financial statements are used for a variety of purposes and decisions. For example, financial statements are used by owners to evaluate managements stewardship, by investors for making decisions about whether to buy or sell securities, by credit rating services for making decisions about credit worthiness of entities, and by bankers for making decisions about whether to lend money. And the auditors responsibility is to express an opinion on whether management has fairly presented the information in the financial statements. In an...
Colorscope, Inc. which was founded by Andrew Cha in 1976 operates mainly in the pre-press house or “color separator”. It has achieved an impressive sales performance. With Colorscope peaking in 1988 with 5 million dollars sales, Donnelley, the largest printer in the world, offered to acquire Colorscope for approximately 10 million. However, it is because Cha’s overconfidence in his existing base of high-margin clients and ignorance of the business trend, Cha declined to accept this acquisition.
The graphic arts industry has seen dramatical business changes over the years. With the rapid development of such technologies as desktop publishing and the World Wide Web as well as the consolidation of several major players within the industry, the company now has to reconsider its market positioning and operation.
In the following we will analyze Colorscope Inc. from the SWOT perspective, then we will come up with some recommendations for its future developments.
The company has built solid relationship with highly valuable print and pre-press buyers in the marketplace and really done a good job in the business processes and training methods. Colorscope’s operators were cross-trained and could work effectively on any stage of the production process.
The stock shares were largely owned by Andrew Cha himself, which is not good for the decision-making mechanism. When it comes to critical decision-making point, it is...
...SUBJECT: Precision Worldwide, Inc.
RECOMMENDATION: My recommendation for Precision Worldwide, Inc. (PWI) is to immediately stop the production of steel rings. PWI then needs to sell the remaining steel rings to at least recoup some of their initial investment. In the meantime they should start producing, selling, and distributing plastic rings to their entire market of customers while attracting new customers who may prefer this new option.
CONCLUSION: By changing their production offering to the plastic rings, PWI will create more profit which in turn will keep them ahead of competitors in the industry. The remaining 15,100 steel rings will have to be calculated as a sunk cost. With this new product offering, PWI will be able to acquire new clientele across the globe and still be able to maintain the loyalty of their existing patrons.
RESULTS: When PWI sells 100 plastic rings, they are expected to make $838.25 more in profit than the sale of 100 steel rings. It costs $1107.90 to produce one hundred steel rings. When that is compared to creating a hundred plastic rings, which only costs $279.65, it becomes more evident why PWI should switch their product line. Plastic rings are also more durable than their steel counterparts and ultimately a better product overall.
The choice that Precision Worldwide, Inc. must make can essentially “make or break” them. Hans Thorborg, the General Manager, faces a predicament with how to deal with their existing and the...
Franz Boas - The Ellis Island Research.
Franz Boas is known as the founder of American anthropology and he dedicated his life to anthropology. Boas is recognized for some early work but mainly for the research he conducted in Ellis Island, New York. Boas once said “No culture is inferior to another. No language is inferior to another. No race is inferior to another.” (1848 – 1942) With the Ellis Island project, he found that exactly. Immigrants coming into Ellis Island aren’t inferior or primitive to US citizens, they just weren’t well-fed or had the same surroundings as a child born in the United States. Boas later tracked down the children of these immigrants and saw that they were growing like any other normal baby in the US. Not just that but they also became taller than their parents. With this evidence concluded that it had to do with environment and diet of the immigrants rather than race. (Franz Boas (1848 – 1942))
Boas first began with the idea that native cultures aren’t as primitive as people from the European world set them to be. He found this out while on his trip to Baffin Island in the Artic, prior to his trip to Ellis Island. When he asked a native for directions, Boas was amazed in the intelligence of the native who gave him detailed directions and drew drawings in the snow. He was amazed again...
...1. What gives rise to the currency exposure at AIFS?
2. What would happen if Archer-Lock and Tabaczynski did not hedge at all?
3. What would happen with a 100% hedge with forwards? A 100% hedge with options? Use the forecast final sales volume of 25,000 and analyze the possible outcomes relative to the ‘zero impact’ scenario described in the case. complete the spreadsheet..
4. What happens if sales volumes are lower or higher than expected as outlined at the end of the case?
5. What hedging decision would you advocate?
American Institute for foreign Study (AIFS) had two divisions. 1. The College division, 2. High School travel division. From the college division the students are sent to different parts of the world for semester long courses. From the second division the high school students as well as their teachers are sent for 1-4 week trips worldwide. More than 50000 students are sent out of the country each year on academic as well as cultural exchange programmes.
For these two events AIFS requires different currencies other than American dollars. When AIFS got major percentage of its revenue in American Dollars it has to expend most in Euros and British Pounds. If there will be any exchange rate volatility, there will be currency mismatch. This gives currency exposure at AIFS.
If Archer-Lock and Tabaczynski would not hedge at all, they had to face the below three risks.
i) Bottom line...
Shearman, D & Sauer-Thompson, G 1997, Green or gone, Wakefield Press, Kent Town.
Year of Publication
Title of Book [italicize]
Place [city] of Publication
x reference lisT feaTUres
eleMenTs for referencing a joUrnal arTicle For a journal article, the following elements should be presented in this order: • surname and initials of author(s) • year of publication • title of article in single quotation marks • title of journal or periodical in italics and maximal capitalisation • volume number where applicable • issue number or other identifier where applicable, for example, Winter • page number(s).
x reference lisT feaTUres
Volume and issue number in lower case
Stove, RJ 1999, ‘Xenophobia: the great local content myth’, Institute of Public Affairs Review, vol. 51, no. 1, pp. 14–16.
Date of Publication
Title of article in minimal capitalisation and in single quotation marks
Italics and maximal capitalisation for journal title
x reference lisT feaTUres
arranging THe reference lisT 1. The reference list is arranged in alphabetical order according to the author’s family name. (Do not use numbers, letters or bullet points to begin each entry.) 2. Any reference that starts with a number (e.g. 7:30 Report) precedes the alphabetical listing and is listed numerically. 3. Where there is more than one author of a publication, maintain the...
...outlet, does not consider their operations illegal or immoral. The belief is that they have a responsibility to report information and that responsibility outweighs other considerations such as the right to individual privacy.
When discussing the right to free speech and free press there are other concerns that must be considered. Does the right to free speech trump the right to individual privacy? Does the right to free press justify breaking the law to obtain certain types of information? Is it permissible to release classified information that puts individuals in harm’s way? Many would agree that releasing information regarding military plans or operations that puts soldiers’ lives in danger is not the right thing to do. In this case, the right of free speech is in direct conflict with the human right to life.
After consideration of the utilitarian and deontological ethics involved, I have come to the conclusion that Bank of America should refuse to process payments and do business with Wikileaks. To protect the organization’s reputation and reduce long-term risk, I believe Bank of America should not be associated with an organization which has been accused of placing people’s lives in danger and potentially destabilizing international relationships. I believe the right to individual privacy and the right to life are more compelling than the right to free speech.
From a business standpoint, this decision would not result in Bank of America...