Chapter 25

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Chapter 25 Powered By Docstoc
					 Chapter 25

Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green

NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installed in Excel.
To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak"
and "Solver Add-In."
sis ToolPak"
Chapter 25
Question 3

Input Area:


Current stock price
Exercise price
Call option
Expiration (months)
Risk-free rate


Output Area:


Put price             $   -
Chapter 25
Question 8

Input Area:


Current stock price
Exercise price
Risk-free rate
Expiration (months)
Standard deviation


Output Area:


d1                    #DIV/0!
d2                    #DIV/0!
N(d1)                 #DIV/0!
N(d2)                 #DIV/0!

Call                  #DIV/0!
Put                   #DIV/0!
Chapter 25
Question 11

Input Area:


Current selling price
Price % increase
Standard deviation
Option to buy
Expiration (months)
Risk-free rate


Output Area:


The 'stock' price is              $0
and the exercise price is
                   $0
d1                        #DIV/0!
d2                      #DIV/0!
N(d1)                   #DIV/0!
N(d2)                   #DIV/0!
Call                    #DIV/0!
Chapter 25
Question 20

Input Area:


Face value of debt
Maturity (months)
Market value
Standard deviation
Risk-free rate


Output Area:


d1                   #DIV/0!
d2                   #DIV/0!
N(d1)                #DIV/0!
N(d2)                #DIV/0!
Equity value         #DIV/0!
Debt value           #DIV/0!

Cost of debt         #DIV/0!
   Chapter 25
   Question 22

   Input Area:


   Maturity (years)
   Face value
   Market value
   Standard deviation
   Risk-free rate
   NPV


   Output Area:


a. d1                         #DIV/0!
   d2                         #DIV/0!
   N(d1)                      #DIV/0!
   N(d2)                      #DIV/0!
   Equity value               #DIV/0!

b. Debt value                 #DIV/0!

c. Rd                         #DIV/0!

d. d1                         #DIV/0!
   d2                         #DIV/0!
   N(d1)                      #DIV/0!
   N(d2)                      #DIV/0!
   Equity value               #DIV/0!

e. Debt value                    #DIV/0!
   Rd                            #DIV/0!
   When the firm accepts the new project,
   part of the NPV accrues to bondholders.
   This increases the present value of the
   bond, thus reducing the return on the bond.
   Additionally, the new project makes the
   firm safer in the sense it increases the
value of assets, thus increasing the
probability the call will end in the money
and the bondholders will receive their
payment.

				
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posted:11/19/2011
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