Bruce Honniball - 1604 Words

BRUCE HONIBALL’S INVENTION Principles of Corporate Finance 7th Edition Richard A. Brealey and Stewart C. Myers MEMORANDUM To: Bruce Honiball From: Sheila Cox Re: Gibb River Bank Equity-Linked Deposits Bruce, thank you for your memo. I think you may be onto a winner with the equity-linked deposits, though my calculations suggest that we can’t afford to be quite as generous as you propose. Spotting the option. Think of it this way. Whatever happens to Australian share prices, depositors under your scheme get back their initial investment of $A100 at the end of the year. If share prices rise by y percent, they also receive a bonus of .5y ( $A100. For example, if prices rise by 10 percent, the bonus is .5 ( .10 (†¦show more content†¦Thanks again, Bruce ----------------------- [1] To replicate Shiela’s calculations, follow the procedures given at pp. 601-605. [2] Sheila’s calculations are close, but not quite right. Part of the value of the market index is comes from the present value of dividends that investors expect over the coming year. Holders of equity-linked deposits miss out on these dividends. Therefore, when valuing the option component of these deposits, she should reduce the value of the market index by the present value of next year’s dividends. Section 6 of Chapter 21 includes an example showing how to value a call option on a dividend-paying stock. [3] Of course, Gibb can’t actually buy a market index. It can, however, buy a portfolio of stocks that closely tracks the index. [4] The amount borrowed is N(d2) times the PV of the exercise price. [5] Gibb could â€Å"borrow† the money by simply investing $A15.09 less in the 1-year loan. [6] Sheila should have added a qualification at this point. She is assuming that delta has been estimated correctly. But if the Australian market turns out to be more or less variable than in the past, delta will not be .6256 and Sheila’s strategy will not replicate the call option exactly. [7] Sheila used put-call parity (see pp. 570-572): Value of call + present value of exercise price = value of put + share price Sheila calculated the value of a call as $A12.28. Share price is 100,Show MoreRelatedBruce Honniball1613 Words   |  7 PagesBRUCE HONIBALL’S INVENTION Principles of Corporate Finance 7th Edition Richard A. Brealey and Stewart C. Myers MEMORANDUM To: Bruce Honiball From: Sheila Cox Re: Gibb River Bank Equity-Linked Deposits Bruce, thank you for your memo. I think you may be onto a winner with the equity-linked deposits, though my calculations suggest that we can’t afford to be quite as generous as you propose. Spotting the option. Think of it this way. Whatever happens to Australian

Assignment On Business Law Assignment - 3960 Words

Assignment attachment form When submitting your assignment it must be accompanied by this Assignment Attachment Form. Please make sure that you complete all of the details correctly. †¢ Provide ALL details requested on this form. †¢ Use one form for each assignment. Unit name: Business Law 1100 Given name: Elton Aik Yin Surname: Goh Student number: 90004481 Email: 90004481@learning.cic.wa.edu.au Assignment title: Business Law Assignment Date submitted: 25th August 2014 Student’s comment to tutor: Word Count: 3497 Marker’s Comments Recorded mark: Marker: Comments: Part A Question 1 Step 1: Area of law The area of law is contract law focusing on the element of agreement. Step 2: Principles of law Contract law is defined as lawfully enforceable agreement between two or more people to a contract. An agreement also known as a promise consists of an offer and an acceptance. An offer is defined as indication of the terms upon which an individual is ready to be obligated. On the other hand, an acceptance is the agreement of the terms that have been offered. The parties associated with the agreement are known as an offeror or an offeree. The offeror is the one who makes the offer, and the offeree is the one accepts the offer (Curtin College 2014). For an offer to be satisfied, there are rules to be considered. The offer has to be complete, promissory, intention to undergo a contract when accepted, and focused on an individual or a group. In addition,Show MoreRelatedAssignment of Business Law1589 Words   |  7 PagesQuestions 1. With examples explain the following general principles of law a. Ne bis in idem b. In dubio pro reo c. Fraus omnia corrumpit 2. Give the Institutional framework of the applicability of accountability principle in Rwanda Q.1. A. THE PRINCIPLE OF NE BIS IN IDEM: A person may not be tried for a criminal offense for which he or she has previously been finally convicted or acquitted. 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All Quiet On The Western Front Essay Example For Students

All Quiet On The Western Front Essay In the words of Otto Von Bismarck, Anyone who has ever looked into the glazed eyes of a soldier dying on the battlefield will think hard before starting a war. Many of the preceding war novels to All Quiet on the Western Front, misrepresented or overlooked the anguish of war, in favor of more resplendent ideals such as glory, honor, or nationalism. The predominant issue of All Quiet on the Western Front is the terrible atrocities of war. The reality that is portrayed in the novel is that there was no glory or honor in this war, only a fierce barbarity that actually transformed the nature of human existence into irreparable, endless affliction, destroying the soldiers long before their deaths. The novel is narrated by Paul Bumer, a young man who fights in the German army on the French front in World War I. Paul along with a number of his friends from school enlisted into the army voluntarily after being subjected to the continual insistence of their teacher, Kantorek. However, shortly after experiencing the grim brutality of war, Paul and his friends have realized that the ideals of nationalism and patriotism for which they enlisted are simply empty clichs. They no longer believe that war is glorious or honorable, and they live in constant physical terror. Throughout the novel, Pauls inner personality is contrasted with the way the war forces him to act and feel. In order for any solider to survive the extreme emotional distress that is inflicted by the brutality of war, the soldier is obligated to disconnect his mind from his feelings. This emotional disconnection has an extremely destructive impact on a soldiers humanity; for example Paul becomes unable to imagine a future without the war. While the disconnection allows the soldier to adapt to the brutal war environment, it inhibits them from re-entering society. When he takes his leave, he is unable to feel comfortable at home. Even if Paul had survived the war physically, he most likely would not have integrated back into society suitably. The emotional disconnection inhibits soldiers from mourning their fallen friends and comrades. However, Paul was somewhat less than able to completely detach himself from his feelings, and there are several moments in the when he feels himself pu lled down by emotion. These rush of feelings indicate the magnitude to which war has automated Paul to cut himself off from feeling, as when he says, with unbridled understatement, Parting from my friend Albert Kropp was very hard. But a man gets used to that sort of thing in the army (p. 269) . World War I was viewed as a new sort of war. Before World War I, wars generally did not involve nonstop fighting over a period of years. In the past the armies mostly consisted of hired mercenaries, or professionals who fought seasonally. However, the soldiers in this novel are volunteers. For Paul and his classmates, the army has become an expression of patriotic duty; they do not perceive it as a career. Outside the classroom, young men of their age faced condemnation from society if they did not join the war effort as volunteers. There were also several new advancements with weapons developed in World War I, such as, machine guns, airplanes, submarines, poison gas, tanks, and trench warfare. Due to the new method of trench warfare World War I quickly became characterized by battles of attrition, in which neither side gained any ground on the other. The major battles of attrition in World War I as well as the technological advancements resulted in hundreds of thousands of casualtie s, making them among the bloodiest battles in human history. The modernized weapons also eliminated the necessity for hand-to-hand combat, causing the primary method of killing in the war to be generally anonymous and conducted from far away, which is one of the reasons that the war, as the novel demonstrates, has such a dehumanizing effect. At this point in history World War I was the bloodiest in human history. Because of the wars severe brutality the soldiers as well as the general world population simply wanted to forget the war ever happened. The carnage and gore