Showing 71 to 80 of 4848 Questions
  • A consultant commented that “too often the numbers look good but feel bad.” This comment often stems from estimation error common to capital budgeting proposals that relate to future cash flows. Three reasons for this error often exist. First, reliably predicting cash flows several years into the future is very difficult. Second, the

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  • A consultant suggests that the weighted-average portfolio duration calculation for a global bond portfolio is the same as for a domestic bond portfolio.a. State whether the use of portfolio duration in international bond portfolio management is more limiting than in domestic bond portfolio management. Support your conclusion with two reas

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  • A convertible bond has a 4 percent coupon, paid semiannually, and will mature in 10 years. If the bond were not convertible, it would be priced to yield 7 percent. The conversion ratio on the bond is 18, and the stock is currently selling for $53 per share. What is the minimum value of this bond?

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  • A convertible bond has the following features:Coupon …………………………………………… 5.25%Maturity ………………………………………….. June 15, 2027Market price of bond ……………………….……. $77.50Market price of underlying common stock ............ $28.00Annual dividend ………………

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  • A corporation issues $5,000,000 of 7% bonds to yield interest at the rate of 5%. (a) Was the amount of cash received from the sale of the bonds greater or less than $5,000,000? (b) Identify the following terms related to the bond issue:(1) Face amount, (2) Market or effective rate of interest, (3) Contract rate of interest, and (4) Maturi

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  • A corporation issues $7,500,000 of 8% bonds to yield interest at the rate of 7%.(a) Was the amount of cash received from the sale of the bonds greater or less than $7,500,000? (b) Identify the following terms related to the bond issue: (1) Face amount,(2) Market or effective rate of interest(3) Contract rate of interest(4) Maturity amount

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  • A corporation plans to issue $10 million of 10-year bonds in 3 months. At current yields the bonds would have modified duration of 8 years. The T-note futures contract is selling at F0 = 100 and has modified duration of 6 years. How can the firm use this futures contract to hedge the risk surrounding the yield at which it will be able to

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    133
  • A corporation reports earnings per share of $1.38 for the most recent year and $1.10 for the preceding year. The $1.38 includes a $0.45-per-share gain from insurance proceeds related to a fully depreciated asset that was destroyed by fire.a. Should the composition of the $1.38 be disclosed in the financial reports?b. On the basis of the l

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    152
  • A dollar today is worth more than a dollar in the future. “The present value of a future dollar is worth less than one dollar.” Are these two statements synonymous? Explain.

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    151
  • A dollar today is worth more than a dollar in the future. The present value of a future dollar is worth less than one dollar. Are these two statements synonymous? Explain.

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