A new firm creates Web sites and electronic commerce strategies for small businesses. Describe the essential elements to be included in its service product.

A nondividend-paying stock has a current price of $30 and a volatility of 20 percent per year. (a) Use the Black-Scholes equation to value a European call option on the stock above with a strike price of $28 and time to maturity of three months. (b) Without performing calculations, state whether this price would be higher if the call were American. Why? (c) Suppose the stock pays dividends. Would...

A Pac-10 university library recently purchased 60 personal computers from Hewlett-Packard. Illustrate how a purchasing specialist at the university could use a total cost-in-use approach in evaluating the value of the Hewlett-Packard offering in relation to the value provided by its rivals.

A particular product strategy will stimulate a response from the market and a corresponding response from competitors. Which specific features of the competitive environment should the business marketing strategist evaluate?

A portfolio consists of the following three stocks, whose performance depends on the economic environment: Assuming that the good economic environment is twice as likely as the bad one, compute the expected return and variance of the portfolio. What if $1,000 of stock 4, which has a mean return of 4%, a variance of .02, and is uncorrelated with the preceding portfolio, is added to the portfolio?...

A project has an expected cash flow of $1 million one year from now. The standard deviation of this cash flow is $250,000. If the expected return of the market portfolio is 10 percent, the risk-free rate is 5 percent, the standard deviation of the market return is 5 percent, and the correlation between this future cash flow and the return on the market is .5, what is the present value of the cash...

A self-employed investor who has just turned 35 wants to save for his retirement with a Keogh account. He plans to retire on his 65th birthday and wants a monthly income, beginning the month after his 65th birthday, of $2,000 (after taxes) until he dies. • He has budgeted conservatively, assuming that he will die at age 95. • Assume that until he reaches age 65, the Keogh account earns 8...

A silver mine has reserves of 25,000 troy ounces of silver. For simplicity, assume the following schedule for extraction, ore purification, and sale of the silver ore: Also assume the following: • The mine, which will exhaust its supply of silver ore in two years, is assumed to have no salvage value. • There is no option to shut down the mine prematurely. • The current price of silver is $4...

A small manufacturer developed a new high-speed packaging system that could be appealing to food-processing firms like Pillsbury and General Mills. This new packaging system is far more efficient but must be priced 15 percent higher than competitors’ products. Because purchasing managers evaluate the “total cost of ownership” of major purchases, what selling points should the business...