Financial literacy

1. As we have learned so far into the course that forecasting cash flows into th

1. As we have learned so far into the course that forecasting cash flows into the foreseeable future poses a unique challenge since most enterprises are expected to stay in busine…

1. Assess the liquidity of the following assets: plant, unlisted securities, lis

1. Assess the liquidity of the following assets: plant, unlisted securities, listed securities, head office building located in the centre of a large city, ships and aircraft, com…

1. Assume Gillette Corporation will pay an annual dividend of $0.63 one year fro

1. Assume Gillette Corporation will pay an annual dividend of $0.63 one year from now. Analysts expect this dividend to grow at 11.9% per year thereafter until the 66th year. Ther…

1. Assume Old.com, Inc. has 10,000 shares of stock outstanding; had Net Income o

1. Assume Old.com, Inc. has 10,000 shares of stock outstanding; had Net Income of $21,000 and paid dividends of $ 12,000. What is the Company's Compute Earnings Per Share (EPS)? a…

1. Assume a firm owns a small airplane worth $700,000. Assume initially that the

1.                  Assume a firm owns a small airplane worth $700,000. Assume initially that the plane is subject to the risk of physical damage. They believe that the probabilit…

1. Assume a particular stock has an annual standard deviation of 55 percent. Wha

1. Assume a particular stock has an annual standard deviation of 55 percent. What is the standard deviation for a 2-month period? (Round your answer to 2 decimal place. Omit the "…

1. Assume a particular stock has an annual standard deviation of 55 percent. Wha

1. Assume a particular stock has an annual standard deviation of 55 percent. What is the standard deviation for a 2-month period? (Round your answer to 2 decimal place. Omit the "…

1. Assume a particular stock has an annual standard deviation of 55 percent. Wha

1. Assume a particular stock has an annual standard deviation of 55 percent. What is the standard deviation for a 2-month period? (Round your answer to 2 decimal place. Omit the "…

1. Assume one year of college costs $38,000 today. If these costs increase at an

1. Assume one year of college costs $38,000 today. If these costs increase at an annual rate of 6.9 percent, what will one year of college cost 20 years from now? 2. Two years ago…

1. Assume that Banc One Receives a primary deposit of $1 million. The bank must

1. Assume that Banc One Receives a primary deposit of $1 million. The bank must keep reserves of 20 percent against its deposits. Prepare a simple balance sheet of assets and liab…

1. Assume that Fund A charges a front-end load of 6%, an expense ratio of 0.4% a

1. Assume that Fund A charges a front-end load of 6%, an expense ratio of 0.4% and no 12b-1 fees. Assume that Fund B charges no front-end load, 12b-1 fees of 0.5% an expense ratio…

1. Assume that a $1,000 par value bond with a coupon rate of 7.5% (paid semi-ann

1. Assume that a $1,000 par value bond with a coupon rate of 7.5% (paid semi-annually) has 20 years to maturity.             a. If the current rate of interest on bonds like this …

1. Assume that a firm has an average net income of $125,000 and an average book

1. Assume that a firm has an average net income of $125,000 and an average book value of $500,000. What is the firm’s average accounting return? A. 25 percent C. 40 percent B. 65 …

1. Assume that an individual can either invest all of his resources in one of th

1. Assume that an individual can either invest all of his resources in one of the two securities, A or B; or, alternatively, he can diversify his investment between the two. The d…

1. Assume that common stock values are consistent with the following model: E(R

1. Assume that common stock values are consistent with the following model: E(Rx) = rf + Bx{E(Rm)- rf)} E(Rx) = required return on asset x. rf = risk free rate of interest Bx = Be…

1. Assume that i 1 = 11% and i 2 = 12%, and that k 1 = 14.50% and k 2 = 16.50%.

1. Assume that i1 = 11% and i2 = 12%, and that k1 = 14.50% and k2 = 16.50%. What is the expected probability of repayment on the one-year corporate bonds in one year's time (round…

1. Assume that in January 2010, the average house price in a particular area was

1. Assume that in January 2010, the average house price in a particular area was $287,400. In January 2001, the average price was $204,300. What was the annual increase in selling…

1. Assume that in recent years, both expected inflation and the market risk prem

1. Assume that in recent years, both expected inflation and the market risk premium (rM ? rRF) have declined. Assume also that all stocks have positive betas. Which of the followi…

1. Assume that interest rate parity holds. The U.S. one-year interest rate is 10

1. Assume that interest rate parity holds. The U.S. one-year interest rate is 10% and the Australian one-year interest rate is 8%. What will the approximate effective yield be for…

1. Assume that on October 27, the Nokia Corporation’s stock traded at $15.36. At

1. Assume that on October 27, the Nokia Corporation’s stock traded at $15.36. At the time the stock price was quoted, the most actively traded option for this stock was a call opt…

1. Assume that one year ago you bought 160 shares of a mutual fund for $20 per s

1. Assume that one year ago you bought 160 shares of a mutual fund for $20 per share, you received a capital gain distribution of $1.05 per share during the past 12 months, and th…

1. Assume that one year ago you bought 160 shares of a mutual fund for $20 per s

1. Assume that one year ago you bought 160 shares of a mutual fund for $20 per share, you received a capital gain distribution of $1.05 per share during the past 12 months, and th…

1. Assume that one year ago, you bought 120 shares of a mutual fund for $25 per

1. Assume that one year ago, you bought 120 shares of a mutual fund for $25 per share and that you received an income dividend of $0.25 cents per share and a capital gain distribu…

1. Assume that the CAPM is a good description of stock price returns. The market

1. Assume that the CAPM is a good description of stock price returns. The market expected return is 7% with 10% volatility and the risk-free rate is 3%. New news arrives that does…

1. Assume that the Par value of the bills is $100. Using the price of the bills

1. Assume that the Par value of the bills is $100. Using the price of the bills listed in the results of the auction, what is the T-bill discount? 2. Assume that the Par value of …

1. Assume that the average firm in your company\'s industry is expected to grow

1. Assume that the average firm in your company's industry is expected to grow at a constant rate of 5% and that its dividend yield is 7%. Your company is about as risky as the av…

1. Assume that the average firm in your company\'s industry is expected to grow

1. Assume that the average firm in your company's industry is expected to grow at a constant rate of 4% and that its dividend yield is 7%. Your company is about as risky as the av…

1. Assume that the average firm in your company\'s industry is expected to grow

1.     Assume that the average firm in your company's industry is expected to grow at a constant rat of 5.8% and its dividend yield is 8.4%. Your company is about as risky as the …

1. Assume that the average firm in your company\'s industry is expected to grow

1. Assume that the average firm in your company's industry is expected to grow at a constant rate of 5% and that its dividend yield is 7%. Your company is about as risky as the av…

1. Assume that the current U.S. dollar - British spot rate is 0.63763£/$. If the

1. Assume that the current U.S. dollar-British spot rate is 0.63763£/$. If the current nominal one-year interest rate in the U.S. is 2% and the comparable rate in Britain is 4%, w…

1. Assume that the exchange rate between the U.S. dollar and the Indian rupee is

1. Assume that the exchange rate between the U.S. dollar and the Indian rupee is 43 rupees per dollar. In Jaiphur you look at a nifty Oriental rug. The dealer (since he likes you-…

1. Assume that the real risk-free rate, r*, is 4% and that inflation is expected

1. Assume that the real risk-free rate, r*, is 4% and that inflation is expected to be 7% in Year 1, 5% in Year 2, and 4% thereafter. Assume also that all Treasury securities are …

1. Assume that the tax on dividends and the tax on capital gains is the same. Al

1. Assume that the tax on dividends and the tax on capital gains is the same. All else equal, what would a prudent investor prefer? A.The prudent investor would be indifferent bet…

1. Assume that you are interested in acquiring the exclusive rights to market a

1. Assume that you are interested in acquiring the exclusive rights to market a new product. If you do acquire the rights to the product, you estimate that it will cost you $250 m…

1. Assume that you are the chief financial officer at Porter Memorial Hospital.

1. Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments—Project X and Project Y. Each pro…

1. Assume that you manage a risky portfolio with an expected rate of return of 1

1. Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 27%. The T-bill rate is 7%. You estimate that a passive portfolio in…

1. Assume that you purchase a call option costing $10/share which would allow yo

1. Assume that you purchase a call option costing $10/share which would allow you to purchase 100 shares of stock at a strike price of $90. If, at the exercise date, the stock was…

1. Assume that you short-sell 50 shares of a stock at a price of $100 a share, p

1. Assume that you short-sell 50 shares of a stock at a price of $100 a share, putting up $4,000 cash and borrowing $1,000 at an interest rate of 5%. If, after one year, the price…

1. Assume the Black-Scholes framework. The continuously compounded risk-free int

1. Assume the Black-Scholes framework. The continuously compounded risk-free interest rate is r is unknown, but for a non-dividend paying stock S we know: • The current stock pric…

1. Assume the following information about the market and XYZ stock\'s beta=1.50,

1. Assume the following information about the market and XYZ stock's beta=1.50, the risk-free rate is 3.5%, the market risk premium ( return to the market less the risk-free rate)…

1. Assume the following information for a U.S.-based MNC that is considering obt

1. Assume the following information for a U.S.-based MNC that is considering obtaining funding for a project in France: U.S. risk-free rate = 2% France risk-free rate = 5% Risk pr…

1. Assume the interest rate in the market for one-year zero-coupon government bo

1. Assume the interest rate in the market for one-year zero-coupon government bonds is i = 8% and the rate for one-year zero-coupon grade BBB bonds is k = 10.2%. What is the impli…

1. Assume the risk-free rate of return is 6%, the expected rate of return on the

1. Assume the risk-free rate of return is 6%, the expected rate of return on the market portfolio is 13%, and the beta of Psy Corp. is 1.3. Psy has earnings of $8 per share that a…

1. Assume there are a bunch of mortgages that are supposed to pay principal paym

1.     Assume there are a bunch of mortgages that are supposed to pay principal payments and interest payments of $2100 during the year are pooled together and sold as securities.…

1. Assume there are a bunch of mortgages that are supposed to pay principal paym

1.     Assume there are a bunch of mortgages that are supposed to pay principal payments and interest payments of $2100 during the year are pooled together and sold as securities.…

1. Assume you are planning to invest $100 each year for four years and will earn

1. Assume you are planning to invest $100 each year for four years and will earn 10 percent per year. Determine the future value of this annuity due problem if your first $100 is …

1. Assume you buy 800 shares of a stock selling for $15 a share, borrowing $4,00

1. Assume you buy 800 shares of a stock selling for $15 a share, borrowing $4,000 at an interest rate of 6% to help finance the purchase. Your account has a maintenance margin of …

1. Assume you buy 800 shares of a stock selling for $15 a share, borrowing $4,00

1. Assume you buy 800 shares of a stock selling for $15 a share, borrowing $4,000 at an interest rate of 6% to help finance the purchase. Your account has a maintenance margin of …

1. Assume you buy a $1,000 face value bond with 7 years until maturity, a coupon

1. Assume you buy a $1,000 face value bond with 7 years until maturity, a coupon rate of 5% paid semiannually, and a yield to maturity of 8%. A) What is the price of this bond? B)…

1. Assume you expect to receive $400 in year 1, $500 in year 2, and $400 in year

1. Assume you expect to receive $400 in year 1, $500 in year 2, and $400 in year 3. What is the present value of this series of cash flows, assuming 3% annual rate of interest? __…