Finance question and answers for September 27, 2023
- Q A stock had returns of 8 percent, –8 percent, 3 percent, and 14percent over the past 4 years. What is the standard deviation ofthis stock for the past four years?Multiple...
- Q QUESTION 55Bank Asset Bond ABank Liability LSettlement43643Settlement43643Maturity50948Maturity47296Rate10%Rate8%Yield9%Yield7%Redemption100Redemption100frequency2frequency2basis0basis0Assume that the only bank asset is the bond A above and the onlybank liability is the liability L above.What happens to bank capital...
- Q Thebeta on Stock A equals 0.75, and the expectedreturn equals 8.625%. The risk free rate equals 3%.Calculate the expected return on themarket.(Enter percentages asdecimals and round to 4 decimals)
- Q ABC Co is considering replacing an old power generator with anew one. the old one was purchased 5 years ago for $100,000. It isdepreciated straightline to zero over its 10...
- Q Your division is considering two investment projects, each ofwhich requires an up-front expenditure of $28 million. You estimatethat the cost of capital is 11% and that the investments willproduce the...
- Q A pension fund manager is considering three mutual funds. Thefirst is a stock fund, the second is a long-term government andcorporate bond fund, and the third is a T-bill money...
- Q True or False. Explain."In forecasting the income statement, it is recommended to tieall items directly to revenue."
- Q Stetson Inc just paid a dividend of D0 = $1.23. Analysts expectthe company's dividend to grow by 25% this year, by 20% in Year 2,12% in Year 3 and at...
- Q Rumpelstiltskin Inc. is considering Projects K and Z, whose cashflows are shown below. These projects are mutually exclusive,equally risky, and not repeatable. The CEO wants to use the IRRcriterion, while...
- Q Siesta Manufacturing has asked you to evaluate a capitalinvestment project. The project will require an initial investmentof $88,000. The life of the investment is 7 years with a residualvalue of...
- Q Ethical Dilemma. Fritz and Helga work for alocal manufacturing company. Since their marriage five years ago,they have been working extensive overtime, including Sundays andholidays. Fritz and Helga have established a...
- Q Google’s stock is trading at a price of $905. A call option with3 months to maturity is available with an exercise price of $890with a premium of $61.40. A put...
- Q How can a stock split affect the long-term profits of aninvestor?
- Q Explain why a domestic bank in the U.S. might create asubsidiary bank in a foreign location like the Cayman Islands.
- Q Use the following information to answer the following 3questionsDirect Market forC$/INR Bids asksDeutsche Bank’squote: C$.0855/INR C$.0865/INRBarclays’quote: C$.0857/INR C$.0864/INRCSFB’squote: C$.0860/INR C$.0871/INRMarkets for INR/$ andC$/$ dollarbids dollarasks CADbids CADasksDeutsche Bank’squote: INR13.0/$ INR13.3/$ $.865/C$ $.871/C$ Barclays’quote: INR13.1/$ INR13.5/$ $.866/C$ $.872/C$CSFB’squote: INR13.2/$ INR13.35/$ $.867/C$ $.875/C$What is the best direct C$/INR ask price? Compute the bestindirect C$/INR bid price. (These are...
- Q Analyze the following ratios.What does the NET PROFIT MARGIN RATIO tell about this company?Are the trends getting better or worse? Why or why not? Would yourecommend purchase of this stock?...
- Q Star Wars & Company is considering the replacement of itsold, fully depreciated blasters. Two new models are available: Type168-3, which has a cost of $265,000, a 4-year expected life, andafter-tax...
- Q Describe the role of an investment banker when a company isinvolved in mergers and acquisitions? (typing please,thank you)
- Q The Stetson Group, a leading producer of custom women'saccessories, has hired you to estimate the firm's weighted averagecost of capital. The balance sheet and some other information areprovided below. AssetsCurrent assets$7,780,000Net...
- Q Problem 14-1 Cumulative Abnormal ReturnsDelta, United, and American Airlines announced purchases ofplanes on July 18 (7/18), February 12 (2/12), and October 7 (10/7),respectively. Delta United AmericanDateMarketReturnCompanyReturnDateMarketReturnCompanyReturnDateMarketReturnCompanyReturn7/12?.42?.63 2/8?.91 ?1.22...
- Q Suppose Robbins Co. stock is selling for $41 per share. Puts andcalls with an exercise price of $50 are available on Robbins. Therisk risk-free rate is 8%. The time to...
- Q Assume that you manage a risky portfolio with an expected rateof return of 23% and a standard deviation of 43%. The T-bill rateis 3%. Stock A27% Stock B36% Stock C37%A client prefers to...
- Q A pension fund manager is considering three mutual funds. Thefirst is a stock fund, the second is a long-term government andcorporate bond fund, and the third is a T-bill money...
- Q Assume that you manage a risky portfolio with an expected rateof return of 12% and a standard deviation of 47%. The T-bill rateis 4%.Your risky portfolio includes the following investments...
- Q Your firm needs a machine which costs $125,000, and requires$5,000 in maintenance for each year of its three-year life. Afterthree years, this machine will be replaced. The machine falls intothe...
- Q PRASAD PLEASE DO NOT ANSWER THIS. YOU ARE ONLY ANSWERING1. I NEED ALL 4. YOU HAVE ANSWERED MULTIPLE WRONG1. Mike recently leased a car for $385 per month for 5...
- Q A pension fund manager is considering three mutual funds. Thefirst is a stock fund, the second is a long-term government andcorporate bond fund, and the third is a T-bill money...
- Q Superman Enterprises has just completed an initial publicoffering. The firm sold 800,000 new shares (the primary offering).In addition, existing shareholders sold 325,000 shares (thesecondary issue). The new shares were offered...
- Q You are planning to save for retirement over the next 30 years.To save for retirement, you will invest $800 per month in a stockaccount in real dollars and $400 per...
- Q Develop and present a valuation model for corporate debt with aface value of $100 million dollars. The model should usehypothetical assumptions for the coupon rate and othercharacteristics as well as...
- Q Beryl’s Iced Tea currently rents a bottling machine for 52,000 peryear, including all maintenance expenses. It isconsideringpurchasing a machine instead, and comparing two optionsA. Purchase the machine it is currently...
- Q High Inc. has an accounts receivable turnover ratio of 7.3. LowCompany has an accounts receivable turnover ratio of 5. Assumingthat High and Low have the same sales? level, which of...
- Q Dentaltech Inc. projects the following data for the coming year.If the firm follows the residual dividend model and also maintainsits target capital structure, what will its dividend payout ratiobe?EBIT$2,600,000Capital budget$1,325,000Interest...
- Q Atreides International has operations in Arrakis. The balancesheet for this division in Arrakeen solaris shows assets of 26,000solaris, debt in the amount of 13,000 solaris, and equity of 13,000solaris. a.If the...
- Q Zinger has a bond outstanding with a coupon rate of 5.6 percentand semiannual payments. The bond has a yield to maturity of 5.5percent, a par value of $2,000, and matures...
- Q A stock sells for $110.A call option on the stock has anexercise price of $105 and expires in 43 days.Assume that theinterest rate is 0.11 and the standard deviation of...
- Q 1) Discuss the stability/instability of the financial system.Include: a) Four common elements in modern U.S. banking crises(class notes). b) Shadow banking system and too big to faildoctrine. c) Frequency of...
- Q I have to prepare two separate counteroffers for a team and theyhave to be structured differently, can't be the same. I have tofigure out how to make sure it's good...
- Q Please discuss the pros and cons of all methods (payback period,NPV, IRR) that we can use to decide whether the project can beexecuted or not. Please explain which method is...
- Q The Hamilton Corporation has 3 million shares of stockoutstanding and will report earnings of $6,880,000 in the currentyear. The company is considering the issuance of 3 millionadditional shares that can...
- Q The exchange will guarantee both side of the contractthat is HOLDER AND WRITER. if the WRITER defaults, the buyer willstill be able to fulfill the transaction. of course the guaranteeto...
- Q 1) Discuss liquidity management of a bank and the tools andoptions to address liquidity by bank managers.
- Q Do you feel that companies may become less accountable fortraining standards if they are able to sidestep the issue bypurchasing insurance that would cover them in cases of employeemisconduct?
- Q McGilla Golf has decided to sell a new line of golf clubs. Thelength of this project is seven years. The company has spent$138237 on research and development for the new...
- Q You are a financial specialist, the first one hired for a poolset up to offer insurance to construction companies in your city.The pool you work for takes in approximately $50...
- Q ottoms Up Diaper Service is considering the purchase of a newindustrial washer. It can purchase the washer for $6,600 and sellits old washer for $2,300. The new washer will last...
- Q Bond P is a premium bond with a coupon of 8.3 percent , a YTM of6.64 percent, and 16 years to maturity. Bond D is a discount bondwith a coupon...
- Q What are the returns on the following investments?InvestmentOriginal Cost of InvestmentSelling Price of InvestmentDistributions ReceivedDollar ReturnPercent ReturnCD$500.00$540.00$0.00Stock$23.00$34.00$2.00Bond$1,040.00$980.00$88.00Bicycle$400.00$220.00$0.00Using the following returns, calculate the average returns, thevariances, and the standard deviations for...
- Q McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $793 per set and have a variable cost of $426per set. The company has...
- Q McGilla Golf has decided to sell a new line of golf clubs. Thelength of this project is seven years. The company has spent$1110000 on research and development for the new...
- Q A firm has the following three projections of revenueestimates:Current Year1 Year2 Year3 Revenue $1,500 $1,650 $1,815 $2,000 EAT $95 $106 $117 $130 The company also receivesa royalty net after taxes of $10 million per year. It is expectedthat the cash flows equal to depreciation...
- Q When considering new projects some business owners want to knowhow quickly they will earn their money back (and use the Payback(PB) method or the discounted payback (DPB) method). Others want...
- Q You are attending a meeting with the Board of Directors of TheMiami Heart Group, P.A. The doctors are concerned about the largeamount of cash that accumulates in the practice checkbook...
- Q Compare and contrast financing with debt vs. equity. What isbeing financed?
- Q McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $847 per set and have a variable cost of $418per set. The company has...
- Q Titan Mining Corporation has 8 million shares of common stockoutstanding, 5 million shares of preferred stock outstanding, and100,000 units of 9 percent semiannual bonds outstanding, par value$1,000 each. The preferred...
- Q We are evaluating a project that costs $110934, has a seven-yearlife, and has no salvage value. Assume that depreciation isstraight-line to zero over the life of the project. Sales areprojected...
- Q Stock split versus stock dividend---Firm??Mammoth Corporation is considering a? 3-for-2 stock split. Itcurrently has the? stockholders' equity position shown. The currentstock price is? $120 per share. The most recent? period's...
- Q You own a stock portfolio invested 25 percent in Stock Q, 20percent in Stock R, 15 percent in Stock S, and 40 percent in StockT. The betas for these four...
- Q 1. Why does WACC increase and IRR decrease as the capitalbudget increases? Are there any steps management can take toreverse these trends?2. How should a company prioritize all of its...
- Q Facts: The Venetian approved a credit line of$500,000 to Nehme. One day, while gambling at the Venetian, Nehmesigned a casino marker for $500,000 payable to the Venetian. Nehmeexchanged the marker...
- Q Based on the investment portfolio information shown below, whatis the portfolio’s beta?StockInvestmentBetaD$465,0000.7E$685,0000.5F$520,0001.2
- Q Consider a four-year project with the following information:initial fixed asset investment = $490682; straight-linedepreciation to zero over the four-year life; zero salvage value;price = $34; variable costs = $24; fixed...
- Q McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $844 per set and have a variable cost of $410per set. The company has...
- Q Shrieves Casting Company is considering adding a new line to itsproduct mix, and the capital budgeting analysis is being conductedby Sidney Johnson, a recently graduated MBA. The cost of newmachinery...
- Q Based on the investment portfolio information shown below, whatis the portfolio’s expected return?StockInvestmentReturnX$250,00013.4%Y$400,00010.9%Z$350,00011.7
- Q We have $1000 to invest, and three possible investments - astock index fund, a bond index fund, and a money market.. Averagereturns on the stock index fund, the bond index...
- Q 1-What is the discount yield, bond equivalent yield, andeffective annual return on a $1 million T-bill that currently sellsat 96.375 percent of its face value and is 65 days from...
- Q Shrieves Casting Company is considering adding a new line to itsproduct mix, and the capital budgeting analysis is being conductedby Sidney Johnson, a recently graduated MBA. The cost of newmachinery...
- Q Quad Enterprises is considering a new three-year expansionproject that requires an initial fixed asset investment of $2.58million. The fixed asset falls into the three-year MACRS class. Theproject is estimated to...
- Q Ghost Rider Corporation has bonds on the market with 17 years tomaturity, a YTM of 6.2 percent, and a current price of $948. Whatmust the percentage coupon rate be on...
- Q Both Bond A and Bond B have 7 percent coupons and are priced atpar value. Bond A has 7 years to maturity, while Bond B has 18years to maturity. If...
- Q EXCEL SPREADSHEETNew Product AnalysisYou have recently graduated with a BBA degree, and you havetaken a job with a local manufacturing company. Your boss has askedyou to analyze a potential new...
- Q Integrative----Optimal capital structure???Theboard of directors of Morales? Publishing, Inc., has commissioned acapital structure study. The company has total assets of $39,500,000. It has earnings before interest and taxes of $7,900,000...
- Q A bond has a yield to maturity of 8 percent. It matures in 10years. Its coupon rate is 8 percent. What is its modifiedduration? The bond pays coupons twice a year.(Do...
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