Consider a market with one stock and one bond, with the same assumptions on parameters as in the derivation of the Black-Scholes formula given in class. Consider a contingent claim whose payoff depends on two dates T1 and T2, with T2 > T1 > 0, and two numbers K1 > 0 and K2 > 0. The maturity date is T2. The buyer of this claim can buy 1 share of stock at time T2 at the price K2, but only if the price of the stock was higher than K1 at time T1. If the price of the stock was lower than K1 at time T1, she cannot buy anything. Find a formula for the price of this contingent claim at time t = 0. The formula has to be explicit in the sense that one could feed it into a computer program, just like the Black-Scholes formula. The formula may contain integrals. It is not necessary to simplify the formula.

Which of the following statements is correct? a. two firms with identical sales and operating costs but with different amounts of debt and tax rates will have different operating incomes by definition. b. free cash flow (fcf) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations. c. retained earnings as reported on the balance sheet represent cash and, therefore, are available to distribute to stockholders as dividends or any other required cash payments to creditors and suppliers. d. if a firm is reporting its income in accordance with generally accepted accounting principles, then its net income as reported on the income statement should be equal to its free cash flow. e. after-tax operating income is calculated as ebit(1 - t) + depreciation.

If you were running a company, what are at least two things you could do to improve its productivity.

Parks corporation is considering an investment proposal in which a working capital investment of $10,000 would be required. the investment would provide cash inflows of $2,000 per year for six years. the working capital would be released for use elsewhere when the project is completed. if the company's discount rate is 10%, the investment's net present value is closest to (ignore income taxes) ?