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1

Finance Sep 22, 2020

1. What sustainability strategies might you recommend for the industry sector in which you work, or intend to work? (These recommendations should be different from or at least much more detailed than those listed in the answer to the previous question.) Explain why you would make these recommendations. Consider time frames, likely effectiveness and costs.

2. 

Better Burgers reported the following numbers (in millions) for the years ending February 2017 and 2018.
 
  2017 2018
  Net income           $ 1,487  
  Dividends             212  
  Total assets   $ 13,650       12,838  
  Total equity     6,281       4,564  
 
 
What are the internal and sustainable growth rates? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
 
What are the internal and sustainable growth rates using ROE × b and ROA × b and the end of period equity (assets)? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
 
What are the growth rates if you use the beginning of period equity in this equation? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

3. Binomial tree and option pricing. A stock's price S is $100. After three months, it either goes up and gets multiplied by the up factor U = 1.10, or it goes down and gets multiplied by the down factor D= 0.90. Options mature after T = 0.25 years and have a strike price K = 100. The continuously com- pounded interest rate is 2% for all maturities. Answer the following questions. (a) Calculate the value of the call option using no arbitrage valuation. (b) Demonstrate how you could make arbitrage profits when a trader quotes a call price of $7. ) Calculate the value of the call option using risk-neutral valuation. (d) Calculate the value of the put option using no arbitrage valuation. (e) )Demonstrate how you could make arbitrage profits when a trader quotes a put price of $3. (f) Calculate the value of the put option using risk-neutral valuation. (g) Show the values of call and put options in (c) and (f) satisfy the put-call parity.

4. Post-GFC how have major central banks been conducting monetary policy to achieve their objectives? 

Expert Solution

1. 1.  PartI

Sustainability strategies

To recommend sustainability strategies for an industry or sector , let us apply the concept in Logistics/Transportation Sector . Every business needs to prioritize. For corporate responsibility and sustainability professionals, a strategy sets out the priorities. It provides an agreed framework for deploying resources, creating an impact and communicating results.

Why ?

The distribution of products affects the local air quality, induces noise and disturbance, induces injuries and contributes significantly to global warming. Logistics has become particularly worried about the consequences of climate change in recent years , in part because of stricter emissions regulations and

Improvements in public safety have mitigated the other Problems, but also since modern study has proven
Global warming is a far larger and near threat
As considered then. Freight transport is estimated to account for approximately 8% of CO2 pollution from electricity around the planet

Time frames,

The time frame depends on the method of creating realistic proposals and tactics to guarantee a project's long-term survival. The emphasis of attention is on a range of tools and competences required for the project's implementation – global, political, logistical, strategic, educational, cultural , social and economic.

Likely effectiveness

The effectiveness depends on the adoption of the following strategies -

1. Strategic Restructuring of logistics systems and supply chains

2.Transferring freight to ‘greener’ transport modes

3.Reducing the environmental impact of warehousing

4. Adoption of urban consolidation centres (UCCs)

Costs.

A number of Fixed Costs, Sunk Costs, Entry Barriers exisit in the path of adoption of hte plan.

potentially high set-up costs (and sometimes high operating costs)

The potential transport and environmental benefits of UCCs have to be weighed against the potential costs associated with consolidation that can include:
•• capital and operating costs of UCCs;
•• an additional handling stage in the supply chain;
•• security, liability and customer service issues associated with additional
companies handling goods.

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4. Post great financial crisis Central banks, all across the world have started to adopt proactive monetary policy in order to estimate the the cycles of economy so that their monetary policy can forecast the economic direction and they could formulate the economic policy in advance so that they can help themselves avoid the risk of recession and maintain the financial stability all across the economy.

Financial crisis can also be attributed to a lot of mishandling of monetary policy by the central bank's so that led to a widespread global financial crisis and after the financial crisis there has been change in the approach of how the global Central Bank started to work as they have been adopting all the monetary tools and they have been continuously reviewing their monetary policy at constant intervals and those monetary policy are just not in synchronisation with the current economic policy but they are also estimating the future economy so they are proactively trying to discount any kind of economic adversity and they are preparing the monetary policy in accordance with those changes in economy and it can be said that Central Bank all across the world have become more conscious and more forecasting along with they have been more supportive and they have provided liberalized policies in order to support the economy and stimulate the economy growth so that they can help the economy in order to survive and sustain through economic adversities.

The recent example can be derived when the Federal Reserve in 2020 after expectation of an impending recession but its interest rate to almost the negative zones because it felt that it needed to stimulate the economy in advance as there was a high risk due to the pandemic of coronavirus which was adversely impacting the growth of the economy so federal reserve cut the interest rate to stimulate the demand in economy and adopting quantitative easing monetary policy and rest of the central bank all across the globe followed the suit.

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