Financial literacy

(Weighted average cost of capital) Bane Industries has capital structure consist

(Weighted average cost of capital) Bane Industries has capital structure consisting of 62 percent common stock and 38 percent debt. The firm's investment banker has advised the fi…

(Weighted average cost of capital) In the spring of last year, Tempe Steel learn

(Weighted average cost of capital) In the spring of last year, Tempe Steel learned that the firm would need to re-evaluate the company's weighted average cost of capital following…

(Weighted average cost of capital) In the spring of last year, Tempe Steel learn

(Weighted average cost of capital) In the spring of last year, Tempe Steel learned that the firm would need to re-evaluate the company's weighted average cost of capital following…

(With this problem there is a table). The percent prices are listed atop and acr

(With this problem there is a table). The percent prices are listed atop and across as price at 8% price at 6% and the percentage change. Each of these have their own row and colu…

(Working with a statement of cash flows) Given the balance sheet, E. and income

(Working with a statement of cash flows) Given the balance sheet, E. and income statement,EEprepare a statement of cash flows for Abrahams Manufacturing Company for the year ended…

(Working with the balance sheet) The Caraway Seed Company grows heirloom tomatoe

(Working with the balance sheet)The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for their superior…

(Yield to maturity) A bond\'s market price is $950. It has a $1,000 par value, w

(Yield to maturity) A bond's market price is $950. It has a $1,000 par value, will mature in 14 years, and has a coupon interest rate of 8 percent annual interest, but makes its i…

(You are based in USA and have a subsidiary language learning school in Mexico).

(You are based in USA and have a subsidiary language learning school in Mexico). At this point, the demand in Mexico is pick up nicely. Your company is currently repatriate 47 mil…

(a) 2,000 common shares at $50 net to the company. (b) $100,000 of 7 percent pre

(a) 2,000 common shares at $50 net to the company. (b) $100,000 of 7 percent preferred stock. (c) $100,000 of 6 percent bonds. Assuming an EBIT of $125,000 for each alternative, d…

(a) A man deposits $2000 in an IRA on his 21st birthday and on each subsequent b

(a) A man deposits $2000 in an IRA on his 21st birthday and on each subsequent birthday up to, and including, his 29th (nine deposits in all). The account earns 8% compounded annu…

(a) A poll of 2,228 likely voters was conducted on the president’s performance.

(a) A poll of 2,228 likely voters was conducted on the president’s performance. Approximately what margin of error would the approval rating estimate have if the confidence level …

(a) A poll of 2,228 likely voters was conducted on the president’s performance.

(a) A poll of 2,228 likely voters was conducted on the president’s performance. Approximately what margin of error would the approval rating estimate have if the confidence level …

(a) Alpha Corporation has Year 0 cash flow of $500 million which is expected to

(a) Alpha Corporation has Year 0 cash flow of $500 million which is expected to grow at 4% per year indefinitely. It has no debt currently. It is considering the following levels …

(a) An annuity is defined as a series of payments of a fixed amount for a specif

(a) An annuity is defined as a series of payments of a fixed amount for a specific number of periods. Thus, $100 a year for 10 years is an annuity, but $100 in Year 1, $200 in Yea…

(a) An annuity is defined as a series of payments of a fixed amount for a specif

(a) An annuity is defined as a series of payments of a fixed amount for a specific number of periods. Thus, $100 a year for 10 years is an annuity, but $100 in Year 1, $200 in Yea…

(a) An investor enters into a short forward contract on 100 million yen. The for

(a) An investor enters into a short forward contract on 100 million yen. The forward exchange rate for US$ 1 is set at US$0.012 per yen. How much does the investor lose or gain if…

(a) Calculate each of the following: 1.The firm’s cost of equity 2.The portion o

(a) Calculate each of the following: 1.The firm’s cost of equity 2.The portion of the cost of equity attributable to the firm’s operating risk. 3.The portion of the cost of equity…

(a) Calculate the volatility (P) of ABC and XYZ Shares. The parameter ? in the e

(a) Calculate the volatility (P) of ABC and XYZ Shares. The parameter ? in the exponential weighted moving average (EWMA) ?-? ??.2+ (1-A) Uar model is 0.96. Forecast the 2018 Vola…

(a) Company A purchased a company B for 685m at the end of 2007 entirely in equi

(a) Company A purchased a company B for 685m at the end of 2007 entirely in equity. In 2008, the company generated 150m net income and post tax profit grew 8% a year through year …

(a) Complete the proof of the “no arbitrage lemma” for the equality cases. (b) W

(a) Complete the proof of the “no arbitrage lemma” for the equality cases. (b) We know for the put-call-parity that an European call is equivalent to an European put plus a future…

(a) Compute 1.year Forward Rate of Interest, excluding the Liquidity Premium (LP

(a) Compute 1.year Forward Rate of Interest, excluding the Liquidity Premium (LP). (b) Re-estimate the 1 -Year Forward Rate of Interest including the L.P. 29. Answer questions a a…

(a) Compute the profitability index for each model and rank the order of priorit

(a) Compute the profitability index for each model and rank the order of priority for the models to be produced. Profitability index PS1 $_______ PS2 $_______ PS3 $________ Sheffi…

(a) Define and explain the four key dimensions of Credit risk, as used to calcul

(a) Define and explain the four key dimensions of Credit risk, as used to calculate RWA for regulatory capital purposes under the Basel 2/Basel 3 rules (FIRB and AIRB approaches) …

(a) Derive the expected return (rP) and beta (?P) for a portfolio based on the f

(a) Derive the expected return (rP) and beta (?P) for a portfolio based on the following information: Stock Percentage of Portfolio Beta (?) Expected Return 1 40% 1.00 12% 2 25% 0…

(a) Discuss briefly why capital structure decisions are important and/or not imp

(a) Discuss briefly why capital structure decisions are important and/or not important for a firm. (S Marks) How do you differentiate the corporate leverage from the home-made lev…

(a) Dunkin’ Donuts’ preferred stock currently sells for $20/share. The preferred

(a) Dunkin’ Donuts’ preferred stock currently sells for $20/share. The preferred stock is expected to pay a perpetual $1.80 dividend per share each year forever. Calculate the cos…

(a) Explain the purpose of a credit rating on a corporate debt issue. In your an

(a) Explain the purpose of a credit rating on a corporate debt issue. In your answer, discuss the importance of a credit rating on an international capital markets debt issue from…

(a) Find the nominal cost of trade credit (b) Find the effective cost of trade c

(a) Find the nominal cost of trade credit (b) Find the effective cost of trade credit for the customer in (a) Now suppose the customer stretches its payables to 45 days. (c) Find …

(a) For what specific situation would a short position on put options on S&P 500

(a) For what specific situation would a short position on put options on S&P 500 index be helpful? For what specific situation would a bear spread with put options on Japanese…

(a) Given the following regression results, Estimated \'s for Stock A: = .85 SMB

(a) Given the following regression results,             Estimated 's for Stock A:   = .85               SMB = 1.04      HML = -.39             Estimated 's for Stock B:   = 1.18  …

(a) Goltra Clinic is considering investing in new heart-monitoring equipment. It

(a) Goltra Clinic is considering investing in new heart-monitoring equipment. It has two options: Option A would have an initial lower cost but would require a significant expendi…

(a) If investors become more jittery (more risk-averse) about investing in the s

(a) If investors become more jittery (more risk-averse) about investing in the stock markets based on new growth fears about the U.S. and global economies, then what will happen t…

(a) If you ignore the direct health benefits shown in column 4, what is the net

(a) If you ignore the direct health benefits shown in column 4, what is the net present value (NPV) of the project? Use a discount rate of 15 percent. (b) What is the NPV using a …

(a) Make use of an arbitrage argument to derive the put-call parity formula C+Ke

(a) Make use of an arbitrage argument to derive the put-call parity formula C+Ker(Tt) = P+X(t), relating the time t prices of a European call option C and a European put option P,…

(a) On March 1, 2018, Cheyenne Co. issued at 102 plus accrued interest $3,630,00

(a) On March 1, 2018, Cheyenne Co. issued at 102 plus accrued interest $3,630,000, 8% bonds. The bonds are dated January 1, 2018, and pay interest semiannually on July 1 and Janua…

(a) On the 1st May 2014, you bought the following portfolio of Commonwealth Gove

(a) On the 1st May 2014, you bought the following portfolio of Commonwealth Government bonds, how much did you pay for each bond per $100 face value and thus the total for the equ…

(a) Patty Stacey deposits $2600 at the end of each of 5 years in an IRA. If she

(a) Patty Stacey deposits $2600 at the end of each of 5 years in an IRA. If she leaves the money that has accumulated in the IRA account for 25 additional years, how much is in he…

(a) Several years ago the Haverford Company sold a $1,000 par value bond that no

(a) Several years ago the Haverford Company sold a $1,000 par value bond that now has 25 years to maturity and an 8.00% annual coupon that is paid quarterly. The bond currently se…

(a) Show before-tax cash flows (BTCF) for n=0 to n=4. (b) Calculate depreciation

(a) Show before-tax cash flows (BTCF) for n=0 to n=4. (b) Calculate depreciation charges (use full-year charge for 4th year). (c) Determine taxable incomes. Consider the depreciat…

(a) Show the computation to yield the $1,033 balance reported for common stock.

(a) Show the computation to yield the $1,033 balance reported for common stock. Enter complete number for number of shares (with all zeros). (Answer shares) x ($Answer ) = $1,033 …

(a) Stent Corporation needs to set a target price for its newly designed product

(a) Stent Corporation needs to set a target price for its newly designed product EverReady. The following data relate to this new product. Per Unit Total Direct materials $ 22 Dir…

(a) Suppose that on 01-09-2010, the price of stock T could be either €100 or €20

(a) Suppose that on 01-09-2010, the price of stock T could be either €100 or €200. There are no put options available on this stock. Call options are available, with an exercise p…

(a) The market index experienced the following returns over the first 6 months o

(a) The market index experienced the following returns over the first 6 months of this year: Month Return Month Return January 0.68 April -1.71 February 5.43 May -2.44 March 1.12 …

(a) The risk-free rate of return is 8 percent, the required rate of return on th

(a)              The risk-free rate of return is 8 percent, the required rate of return on the market, E[Rm] is 12 percent, and Stock X has a beta coefficient of 1.4. If the divid…

(a) The risk-free rate of return is 8 percent, the required rate of return on th

(a) The risk-free rate of return is 8 percent, the required rate of return on the market, E[Rm] is 12 percent, and Stock X has a beta coefficient of 1.4. If the dividend expected …

(a) Use linear programming to determine how many reservations to accept in each

(a) Use linear programming to determine how many reservations to accept in each rental class and how the reservations should be allocated to room types. Rental Class with room typ…

(a) What are the key factors used to assess credit risk using the traditional qu

(a) What are the key factors used to assess credit risk using the traditional qualitative approach to credit risk assessment? (b) Describe how credit spreads may be used to estima…

(a) What is the difference between the (ordinary) break-even point and the cash

(a) What is the difference between the (ordinary) break-even point and the cash break-even point and which will be the greater?     (8 marks) (b) Pharmaceutical Bhd manufactures m…

(a) Why investors pay more attention to the time preference for money when makin

(a) Why investors pay more attention to the time preference for money when making their financial decisions? (2 Marks) What is meant by the term structure of interest rates? Discu…

(a) Why is the capital budgeting decision crucial and important for a firm? Stat

(a) Why is the capital budgeting decision crucial and important for a firm? State why the capital budgeting errors are so costly?     (5 marks) (b) Suntex Berhad is considering a …