Pricing Essay Examples

pricing at 500 with premium P. The expected value of the hedged firm is: (500-(500-300)*0.4)/(1+0.05)-P=420-P Problem (c) The safe debt is the one that pays off not more than 200 in a year. The value of the firm is:0.5*(200-200)/(1+0.05)+0.5*(500-200-(500-200-300)*0.4)/(1+0.05)=142.86 Problem (d) The safe debt is the one that pays off not more than 200 in a year. Let’s buy put options for gold pricing at 500 with premium P. The value of the firm is: (500-200-(500-200-300)*0.4)/(1+0.05)-P=285.71-P Problem (e) The firm’s value is: 0.5*(200-250-20)/1.05+0.5*(500-250)/1.05=119.05-33.33=85.71 The return of the investment may be either: -(33.33/250)=-13.3%, or 119.05/250=47.6% The yield to...

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pricing for both ask and bid would be: 0 < bn ≤ an < 1 The trading price model is guided by the impression of the value remaining unknown, and the possibility of settling at 1 as its optimal. Assuming MMn2 is informed of the value, then the guiding model would be guided by the established information. The new model would indicate: 1 < bn ≤ an > 1 In the pricing model for the informed MM, the bid price is beyond that the uninformed MM, while the asking price is below that of the informed counterpart. Show that the lowest c such that no MM becomes informed in equilibrium is c = 1/4. That is to say, MMs will be uninformed for c > 1/4, but informed (pn > 0 for at least one MM)...

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pricing. However, this strategy will be short lived since other firms in the market will lower their prices as well. Lower average cost The firm will need to maintain its average costs at the minimum to make a profit. Average cost is given by the total costs incurred in the production divided by the units produced. Maximize Total Revenue Total revenue is given by the average revenue multiplied by the price. Therefore, the firm will be required to maximize the units sold since it cannot raise the price. Graph what will happen to the market and the profits of the business The Fetchy Trends Company expects to increase its sales revenue after expansion since they will now sell many units. The...