Finance question and answers for July 18, 2023
- Q A corporate bond has a face value of $10,000, a coupon rate ofinterest of 8.25% per annum, payable semi-annually, and six and ahalf years remaining to maturity. The market interest...
- Q A bank has $100 million of investment grade bonds with aduration of 9.0 years. This bank also has $500 million ofcommercial loans with a duration of 5.0 years. This bank...
- Q When Victor is 10 years old, his father deposits acertain amount of money in a university fund that pays 12.4%capitalized semiannually. When Víctor turns 15, his father willdeposit an amount...
- Q Imagination Dragons Corporation needs to raise funds to financea plant expansion, and it has decided to issue 25-year zero couponbonds with a par value of $1,000 each to raise the...
- Q A debt must be settled in two years, through paymentsof 6000 dollars every two months overdue. The debtor agrees withhis creditor to restructure the debt liquidating the debt in 3years...
- Q “A low-coupon security is more price-volatile [inresponse to a given change in yield that a high-coupon security.”True or false, or what? Explain carefully.
- Q GUTMAN(2007) ECOSYSTEM SERVICESSAWYER (2014) WHAT IS FINANCIALIZATION?
- Q An equally weighted portfolio consists of 22 assets which allhave a standard deviation of 0.154. The average covariance betweenthe assets is 0.046. Compute the standard deviation of thisportfolio. Please enter...
- Q Suppose you considering an ARM with the followingcharacteristics:Mortgage amount$2,000,000Index1-year Treasury Bill yieldMargin2.50Maximum annual adjustment2%Lifetime interest cap6%Discount points2.00Loan maturity30 yearsIf the Treasury Bill yield is currently 6 percent, what is themonthly...
- Q Sofia must pay $ 110000 within 2 years. With thispurpose she begins to save $ 3000 monthly for 18 consecutivemonths, earning 1.6% monthly capitalizable each month during thefirst year and...
- Q Mr. Gomez has spent 8 months saving $ 1000 at thebeginning of each fortnight, the interest rate being equal to 10%capitalizable biweekly. The day he will make the seventeenthdeposit, Mr....
- Q Fund A has a sample mean of 0.13 and fund B has a sample mean of0.18, with the riskier fund B having double the beta at 2.0 as fundA. The...
- Q Assume the following characteristics for a particular bond: Aface value of $1,000; annual coupon payments of $60 (the firstpayment due in 1 year); an internal yieldto-maturity of 7%(compounded annually); and...
- Q Assume that owing to the explosion of computers and the experttraining of security analysts, the market, as confirmed by numerousstudies, has been shown to be 95% efficient. Investment firms have,thus,...
- Q Suppose you discovered a systematic relationship between thepriceearnings ratios of stocks and the performance of stocks. Inother words, knowledge of a firm’s price-earnings ratio provedhelpful in predicting which stocks would...
- Q Computech Corporation is expanding rapidly and currently needsto retain all of its earnings; hence, it does not pay dividends.However, investors expect Computech to begin paying dividends,beginning with a dividend of...
- Q : You are given the following probabilitydistribution for CHC Enterprises:State of EconomyProbabilityRate of returnStrong0.2518%Normal0.58%Weak0.25-6%What is the stock's expected return? Round your answer to 2decimal places. Do not round intermediate calculations.%What...
- Q Assume you have a liability with three required payments: $3,000due in 1 year; $2,000 due in 2 years; and $1,000 due in 3years.(a) What is the Macaulay duration of this...
- Q A $1000 face value bond currently has a yield to maturity of6.69%. The bond matures in three years and pays interest annually.The coupon rate is 7%. What is the current...
- Q Identify two interesting articles about an issue related tomoney and capital markets, financial markets, financialinstruments, international markets, and economic policy. Then foreach article, write a 2 page analysis (double spaced)....
- Q LaTanya Corporation is planning to issue bonds with a face valueof $101,000 and a coupon rate of 6 percent. The bonds mature inseven years. Interest is paid annually on December...
- Q A project has the following cash flows for years 0 through 2,respectively: -10,529, 8,541, 8,441. What is the internal rate ofreturn on this project?
- Q Suppose the call price is $14.10 and the put price is $9.30 forstock option where the exercise price is $100, the risk free rateis 5 percent (continuously compounded), and the...
- Q CHOCO is a new firm that has raised £150,000 (book value) byselling ordinary shares. Management plans to earn 20% rate ofreturn on equity (ROE), which is more than the 15%...
- Q Meyer & Co. currently has no debt, but it can borrow at 8percent. The firm value is $415,000, and its cost of equity is 13percent. The tax rate is 35...
- Q Mary is analyzing a capital budgeting project with thefollowing data:Cost of packaging machine 5 millionAnnual straight line depreciation over 5 years$1,000,000Salvage value 200kWorking capital 5% of CF’s per year with...
- Q Arden Corporation is considering an investment in a new projectwith an unlevered cost of capital of 9.2 %. ?Arden's marginalcorporate tax rate is 36 %?, and its debt cost of...
- Q The following loan is a simple interest amortized loan withmonthly payments. (Round your answers to the nearest cent.)$7000, 9 1/2%, 4 years
- Q 1. A US company designs its products in US but manufacturesthose products inChina.a) What type of currency exposure the US Company will face?b) List three strategies to manage the operation...
- Q 1) An oil refinery company wants to hedge the riskagainst the rise in the oil price for purchase in the December of2018. Thus, it enters into the oil futures market...
- Q Suppose you have been hired as a financial consultant to DefenseElectronics, Inc. (DEI), a large, publicly traded firm that is themarket share leader in radar detection systems (RDSs). The companyis...
- Q Name and briefly explain the principal categories of criteria onwhich bankers base their decisions when assessing a creditapplication?
- Q You are evaluating a proposed expansion of an existingsubsidiary located in Switzerland. The cost of the expansion wouldbe SF 15 million. The cash flows from the project would be SF...
- Q Scanlon plans represent a? group-level incentive plan thatprovides payouts based on whether the implementation of proposalsfor labor costs savings are successful. Among the importantdetermining factors is the calculation of Scanlon...
- Q A Treasury bond with 5 years to maturity is currently quoted at107:15. The bond has a coupon rate of 7.7 percent. What is theyield value of a 32nd for this...
- Q Willerton Industries’ long term debt is comprised of 20-year$1,000 face value bonds totaling $65 million issued seven years agoat an 8% coupon rate. The bonds are now selling to yield...
- Q Suppose a? five-year, $1,000 bond with annual coupons has aprice of $903.04 and a yield to maturity of 6.3%. What is the?bond's coupon? rate?
- Q Last week, Onboard Co. has announced that the next two annualdividends will be in the amount of $2.13 and $3.74, respectively.After that, the dividends will increase by 2.01 percent annually.The...
- Q What are the primary disadvantages andadvantages of a reverse mergerstrategy?What are the primary differences betweena forward and a reversetriangular merger? Give some examples.(From Mergers, Acquisitions, and Other Restructuring ActivitiesSolutions Manual)
- Q You are given the following information concerning ParrotheadEnterprises: Debt: 9,100 6.3 percent coupon bonds outstanding, with24 years to maturity and a quoted price of 104.25. These bonds payinterest semiannually. Common...
- Q Firm X and Firm Y have identical assets that generate identicalcash flows. Firm X is an unlevered firm, with 2.5 millionoutstanding shares and the market price of $20 per share....
- Q royal mediterranean cruise lines common stock is selling for 45.69per share. the last dividend was 1.46, and dividends are expectedto grow at a 7% annual rate. flotation costs on the...
- Q Ying Import has several bond issues outstanding, each makingsemiannual interest payments. The bonds are listed in the followingtable. If the corporate tax rate is 32 percent, what is theaftertax cost...
- Q Assignment 2 (assessment worth15%)Due Date 24 May at 5pm GMT+8[Submission will be strictly observed. Make submissionvia Turnitin]Question 1Assume Alpha Ltd is currently trading on the NYSE with a stockprice of...
- Q The Bell Weather Co. is a new firm in a rapidly growingindustry. The company is planning on increasing its annual dividendby 15 percent a year for the next 4 years...
- Q Waller, Inc., is trying to determine its cost of debt. The firmhas a debt issue outstanding with 20 years to maturity twith acurrent price of $854. The issue makes semiannual...
- Q A store has 5 years remaining on its lease in a mall. Rent is$2,000 per month, 60 payments remain, and the next payment is duein 1 month. The mall's owner...
- Q The real risk-free rate (r*) is 2.8% and is expected to remainconstant. Inflation is expected to be 4% per year for each of thenext three years and 3% thereafter.The maturity...
- Q 9. When analyzing financial statements, besides reviewing datayear over year for comparisons, the analyst should also compare thedata to_________________________________________10. Give an example of “separation of duties “ in the accountingdepartment...
- Q Which is the value of this bond?maturity is 5 years from now; nominal is 6.000 euros and the couponis 5%?The market interest rate is 4% for this combination of issuer...
- Q What do you believe are some challenges to advising individualsor institutions on investment goals? What strategies would you useto overcome those obstacles?
- Q . Prepare a matrix comparing the differences among thefollowing:a. IRA and Roth IRA.b. 401(k), SEP and ESOP.Make sure to include the following:Who or what organizations should use each plan?What are...
- Q 1. You are considering purchasing a house for $225,000. Do athree-month loan amortization and calculate the total financecharge. Assume a 20 % down payment.Do a three-month loan amortization table on...
- Q How should we estimate the mix of equity and debt inthe firm’s capital structure, and what will make itchange?b, How can we combine this information in order to estimate acompany’s...
- Q McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $870 per set and have a variable cost of $470per set. The company has...
- Q Does a corporation on whose stock an option is written receiveany funds from the transaction?Can option holders vote for corporate directors?What is the objective of a hedge portfolio in the...
- Q Suppose you have been hired as a financial consultant to DefenseElectronics, Inc. (DEI), a large, publicly traded firm that is themarket share leader in radar detection systems (RDSs). The companyis...
- Q Problem 11-19 Project Analysis [LO1, 2, 3, 4]You are considering a new product launch. The project will cost$2,225,000, have a four-year life, and have no salvage value;depreciation is straight-line to...
- Q You are looking at an investment that has an effective annualrate of 12.8 percent.a.What is the effective semiannual return? (Do not roundintermediate calculations and enter your answer as a percentrounded...
- Q following yield curveinterest rate1%2%3%And that the FRA (1 year,starting two year from now) is 4%Calculate the implicit 1 year interest rate that we areexpecting for next year and next next...
- Q You calculate that the duration of your assets of your bank is5.6 years and the duration of your liabilities is 4.2 years. Youcurrently have $70 million in liabilities and $5...
- Q Garlington Technologies Inc.'s 2018 financial statements areshown below:Balance Sheet as of December 31, 2018Cash$ 180,000Accounts payable$ 360,000Receivables360,000Notes payable156,000Inventories720,000Line of credit0Total current assets$1,260,000Accruals180,000Fixed assets1,440,000Total current liabilities$ 696,000Common stock1,800,000Retained earnings204,000Total assets$2,700,000Total liabilities and equity$2,700,000Income Statement...
- Q Upton Computers makes bulk purchases of small computers, stocksthem in conveniently located warehouses, ships them to its chain ofretail stores, and has a staff to advise customers and help themset...
- Q Stevens Textile Corporation's 2018 financial statements areshown below:Balance Sheet as of December 31, 2018 (Thousands ofDollars)Cash$ 1,080Accounts payable$ 4,320Receivables6,480Accruals2,880Inventories9,000Line of credit0 Total current assets$16,560Notes payable2,100Net fixed assets12,600 Total current liabilities$ 9,300Mortgage bonds3,500Common...
- Q Discuss the various theories related to the term structure ofinterest rates. What are the strengths and weaknesses of each ofthese approaches. What are the implications of the empiricalresults related to...
- Q Bob's Burgers has a beta of .8 and just paid a dividend of $1.2that is expected to grow at 3.5%. If the risk-free rate is 3% andthe market risk premium...
- Q The current stock price for a company is $37 per share, andthere are 4 million shares outstanding. This firm also has 280,000bonds outstanding, which pay interest semiannually. If these bondshave...
- Q Market Value Capital Structure Suppose the Schoof Company hasthis book value balance sheet:Current assets $30,000,000Current liabilities $20,000,000Fixed assets 70,000,000Notes payable $10,000,000Long-term debt 30,000,000Common stock (1 million shares) 1,000,000Retained earnings 39,000,000Total...
- Q The 2018 balance sheet of Speith’s Golf Shop, Inc., showedlong-term debt of $6 million, and the 2019 balance sheet showedlong-term debt of $6.25 million. The 2019 income statement showedan interest...
- Q Cusic Industries had the following operating results for 2019:sales = $33,712; cost of goods sold = $23,918; depreciation expense= $5,937; interest expense = $2,680; dividends paid = $1,942. Atthe beginning...
- Q Masters Machine Shop is considering a four-year project toimprove its production efficiency. Buying a new machine press for$806,400 is estimated to result in $268,800 in annual pretax costsavings. The press...
- Q Pearl Corp. is expected to have an EBIT of $3,400,000 next year.Depreciation, the increase in net working capital, and capitalspending are expected to be $160,000, $155,000, and $195,000,respectively. All are...
- Q Lucas Corp. has a debt-equity ratio of .85. The company isconsidering a new plant that will cost $120 million to build. Whenthe company issues new equity, it incurs a flotation...
- Q Hyperion? Inc., currently sells its latest? high-speed color?printer, the Hyper? 500, for $ 343. It plans to lower the price to$ 297 next year.Its cost of goods sold for the...
- Q What are 3 challenges for executing a merger or acquisition?List, explain, and provide 1 example (total).
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