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Exercise session: relevant questions

Exercise session: relevant questions. Finansiell ekonomi workshop.

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Exercise session: relevant questions

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  1. Exercise session: relevant questions Finansiell ekonomi workshop

  2. AB Ericsson tänker ge ut kupongobligationer som löper under 3 år. Målsättningen är att sätta emissionspriset på obligationen till ett premiumpris som är 10 procent högre än obligationens nominella värde. Det nominella värdet är 100.000 Skr och marknadsräntan för 3-åriga företagsobligationen ligger på 4 %. • Hur måste kupongräntan förhålla sig till marknadsräntan för att företaget skall kunna sälja obligationen till ett premiumvärde? • Vilken kupongränta måste företaget minst erbjuda för att kunna sälja obligationen till dess premiumvärde? • Vem vinner och vem förlorar samt hur mycket på att marknadsräntan stiger till 6 % några dagar efter emissionen genomförts?

  3. DCF metod Svar: kupongen: =BETALNING (4%;3;-110000; 100000;0)

  4. svar Svar: a) Kupong räntan måste vara högre än marknadsräntan för att kunna sälja till premium. B) Kupongen ska vara 7 603,49 kr, motsvarar 7,6% kupong ränta i det här fallet då marknadsräntan ät 4%. C) Priset sjunker till 104 286 kr om räntan ökar till 6%. Jag förlorar 5714 kr på det nya marknadspriset.

  5. Q: Whentoreplace an old machine? Machine H and I aremutuallyexclusive. And have the following investment and operating costs. Note thatmachine H last for only 2 years. a) calculating the equivalentannualannuityofeach investment by using a discount rate of 10%, whichmachine is the betterbuy?

  6. Forts. • For machine H: PV =10000+1100/1,1+1200/(1,1)^2) =11991,736 Annuity over 2 years=11991/(1/0,1-(1/(0,1*((1,1)^2))))=6909 For machine I: PV=12000+1100/1,1+1200/(1,1)^2+1300/(1,1)^3= 14968. Annuity for the eachof the 3 years is 6019. wellbelowmachineH´syearlycost! Note; Year 1=1100/(1,1)=1000 year2= 1200/(1+0,1)^2=992 Year3 =1300/(1+0,1)^3=976,7

  7. b) Nowsupposeyouhave an exisitingmachine. Youcankeep it going for onemoreyearonly. But it willcost 2500 kr in repairs and 1800kr in operating costs. Is it worthreplacingnowwitheither H or I? Svar: No, youshouldkeep the old machine for anotheryear. Since the drift cost is lowerthaneithermachine H or I. 2500+1800=4300 kr

  8. DCF method: whichmachinetoinvest? Self-test 8,3in coursebook (alternativ 8,7)

  9. Calculating mean and volatility: chapter 11 Obs: step 1, get the Mean 8,5%, step 2, get the deviations from the mean and step 3, square it to get the variance. Since we have 6 years’ observations, divide it with 6.

  10. Portfolio Risk ExampleCorrelation Coefficient = .4 Stocks s% % of Portfolio Avg Return ABC Corp 28% 60% 15% Big Corp 42% 40% 21% Standard Deviation = weighted avg. = 33.6 (this is an average of the std) Standard Deviation = Portfolio = 28.1 Real Standard Deviation: Portfolio Variance = (282)(.62) + (422)(.42) + 2(.4)(.6)(28)(42)(.4) STD= SQRT (Variance) = 28.1CORRECT obs: std= ROT(varians) påsvenska Mean: r = (15%)(.60) + (21%)(.4) = 17.4%

  11. Stock market return, risk premium and std

  12. Volatilityof the risk premium

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