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- Question 13 Based on NPV ABC should accept Go all three only A and B Only A and C only C Question 14QUESTION 4 Consider the Black-Scholes-Merton formula: c = SoN(d₁) - Ke-™TN (d₂) p = Ke-TN(-d₂) - SoN(-d₁) where, d₁ = and d₂ = In(So/K)+(r+²)T αντ In(So/K)+(r)T αντ =d₁ - o√T a. Discuss the meaning of N(d₂).Problem 9-25 Fudge factors An oil company executive is considering investing $10.1 million in one or both of two wells: well 1 is expected to produce oil worth $3.01 million a year for 10 years; well 2 is expected to produce $2.01 million for 15 years. These are real (inflation-adjusted) cash flows. The beta for producing wells is 0.91. The market risk premium is 9%, the nominal risk-free interest rate is 7%, and expected inflation is 3%. The two wells are intended to develop a previously discovered oil field. Unfortunately there is still a 21% chance of a dry hole in each case. A dry hole means zero cash flows and a complete loss of the $10.1 million investment. Ignore taxes and make further assumptions as necessary. a. What is the correct real discount rate for cash flows from developed wells? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real discount rate b. The oil company executive proposes to add 20 percentage points to the…
- Q.47 Using the repeatability assumption, what is the PW of Alternative Y? O. $22,436 O. $58,192 O. $7,740 O. $12,385 Q. 48 Using coterminated assumption, what is the FW of Alternative X? O. $12,385 O. $7.740 O. $22,436 O. $58,192 Q. 49 Using the coterminated assumption, what is the FW of Alternative Y? O. $22,436 O. $58,192 O. $12,385 O. $7,740 Q. 50 Which alternative is selected? O. Alternatíve X O. Alternative Y O. neither X nor Y is economically attractive O. X and Y are equally attractiveD nctions Question 10 Use the diagram below to find each of the following: sine of point a • cose of point b • tane of point c d eIf n(A) = 150, n(B) = 150, and n(A ∪ B) = 210, what is n(A ∩ B)?
- - Qus 2 Exp lain the shape g he yiedd Curut in Querr. Diffenentiale befween forewan de and futurs. Quo y. Explair with example,What de bj Swap Agreemonez you we mas88 MULTIPLE CHOICE Question 6 Listen If f(x)= and g(x) = x²-16, then what is the value of f(g(4))? A 0 B 4 C undefinedSuppose that we have two events, A and B, with P(A) = 0.50, P(B) = 0.60, and P(A B) = 0.40. a. Find P(A | B). b. Find P(B | A). c. Are A and B independent? Why or why not?
