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Finance Questions and Answers April 28, 2016

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You have a one-year investment horizon with $1,000,000 in hand, and are presented with two fixed-income investment options. Which one provides a higher return? Assume your goal is to maximize returns. Lend at one-year spot rate of 10% for a year. Lend at 6-month spot rate of 8% for the first 6 months, and then lend at a new 6-month rate of 12% for

Which valuation methodology is most appropriate for project finance? Question 1 options: Equity cash - flows discounted at the leveraged equity cost of capital Valuation by comparable Equity cash - flows discounted at the equity cost of capital adjusted for the changing leverage of the project Free cash - flows discounted at the weighted average

Bond A has a 12% coupon and Bond B has an 8% coupon. Both bonds have a 10% YTM and five years to maturity. Which of the following statements is most correct? O a If market interest rates were to increase, Bond B would have the greatest increase in price b. If market interest rates remain unchanged, Bond A's price will be higher one year from now
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Don's Captain Morgan, Inc. needs to raise $13.70 million to finance plant expansion. In discussions with its investment bank, Don's learns that the bankers recommend an offer price (or gross proceeds) of $21.60 per share and Don's will receive $18.85 per share. Calculate the underwriter's spread per share on the issue. (Round your answer to 2
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Assume the nominal rate of return is 10.17% and the inflation rate is 3.08%. Find the real rate of return using the exact formula. Assume the real rate of return is 2.80% and the inflation rate is 4.28%. Find the nominal rate of return using the exact formula. Assume the nominal rate of return is 9.62% and the real rate is 2.78%. Find the

McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $960 per set and have a variable cost of $430 per set. The company has spent $147,500 for a marketing study that determined the company will sell 48,500 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,100 sets of

4 Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise: 10 points a. A suitable location in a large shopping mall can be rented for $4,400 per month. b. Remodeling and
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Consider Georges example in Scenario 4, but this time, instead of his TFSA growing to $400,000, he loses all the money as the company goes bankrupt in November 2022. How much would his contribution room then be for 2022? 2023? (.5 marks-.25 marks each) 2022: $____________ (.25 marks each) 2023: $____________ (.25 marks each) 2022:

The common stock of Buildwell Conservation & Construction, Inc. (BCC) has a beta of .80. The par value is $.10. Additional paid in stockholders capital is $9,900,000. Retained earnings equals $10,000,000. The Treasury bill rate is 4 percent and the market risk premium is estimated at 8 percent. BCCs target capital structure is 30 percent debt and

Question 4 (15 marks) a. Briefly discuss the functions served by the money markets. Name two examples of money market securities commonly owned or traded by commercial banks. 6 marks b. A Treasury bill (T-bill) that is 182-days from maturity is selling for $940. The T-bill has a face value of $1,000 Calculate the annualized yield' and 'discount
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You want to have $45,000 in your savings account 7 years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 7.9 percent interest, what amount must you deposit each year? Multiple Choice 0 $8,586.3 $3,555.01 $3,554.98 $5,058.72
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Dear all, I'm reposting this banking and finance question as my first post was not answered and was closed. Kindly note the question below and what is to be prepared in an excel sheet. Question : you are a bank branch manager and you have been instructed by management to prepare you risk control self assessment, you will have to input your
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Hemaning Time: 05 35 Yellow Corporation stock currently sells for $20 per share. There are 1 milion shares currently outstanding. The company announces plans to maine samtion by offering shares to the publicat a price of $20 per share. If the underwriting spread is 4%, how many shares will the company need to issue in order to be left with net
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(Annuity payments) Emily Morrison purchased a new house for $180,000. She paid $60,000 upfront and agreed to pay the rest over the next 25 years in 25 equal annual payments that include principal payments plus 13 percent compound interest on the unpaid balance. What will these equal payments be? a. Emily Morrison purchased a new house for $180,000
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In Jan 2020, Miss Anna moved to Dallas for a new job in an investment firm. There, she rented a spacious, two-bedroom house for $2,000 per month, which included parking but not utilities or cable television. In July 2020, the virtually identical unit next door became available for sale with an asking price of $620,000, and Anna believed she could

Question 1 (2 points) Testgen questions still do not copy to other applications. More than sixty percent of homeowner's insurance premiums go towards settling claims. True False Question 2 (2 points) Consider the loss from fire damage of furniture which cost $6000 thee years ago and has an expected life of ten years. This furniture would cost
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Kleine Toymakers is introducing a new line of robotic toys, which it expects to grow their earnings at a much faster rate than normal over the next three years. After paying a dividend of $2.00 last year. it does not expect to pay a dividend for the next three years. After that Kleine plans to pay a dividend of $6.00 in year 4 and then increase
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UIMUS The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up." As a result, the cemetery project will provide a net cash inflow of $102,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 5 percent per year forever. The project
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Company A, a publicly traded company, gets involved in a major public controversy over its spending of corporate funds to contribute to various extremist political groups and candidates, who happen to also support policies favorable to Company As business. Many consumers start boycotting Company As products and the Companys revenue falls off. The

. There are asset backed securities with 10% in the equity tranche, 10% in the mezzanine tranche, and 80% in the senior tranche. The mezzanine tranches are repackaged to form CDOs with 10% equity tranches, 20% mezzanine tranches, and 70% senior tranches. What are the losses in each of the tranches of the ABSs and the CDOs when the losses of 1 the

Write down a project on Oracle Buys Cerner with the following topics: Reason for deal: Synergies with existing products or services Better competitive position Value to shareholders Corporate adjustments (1/2 page): Staff reductions and or additions Facilities reductions/additions/consolidations Future Financing needs Current Financial Situation

You just graduated and accepted the job of your dreams. You will be making $4,300 a month and renting an apartment that will cost you $980 a month. You have no other debt. a. What amount can you afford for a car payment? Car payment amount month b. What amount can you afford for a car payment if you also have a student loan payment of $280 a month
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Assume that inflation averages 3.50% over the next 20 years. If John invests $24000 in an exchange-traded fund within a tax-deferred account and that investment grows to $54000 at the end of 20 years, will he have maintained his purchasing power? a. Yes, because he only needed about $6000 to keep pace with inflation. b. It is hard to tell because

International portfolio investments have boomed in recent years, as a result of Select one: a. the general relaxation of capital controls and regulation in many countries. b. increased gasoline and other commodity prices. c. a depreciating U.S. dollar. d. none of the options apply The euro Select one: a. all of the options apply b. is the common

4. Mr. N invests $5,000 in a certificate of deposit in his local bank. He receives 2 percent interest rate compounded annually for 5 years. How much would be the total accumulated fund from this investment after this is compounded after 2 years? (10 points) (1) Please use table method (using FVF) and compute the answer. (ii) Please use Microsoft
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1. In the money laundering process, the transfer of financial product ownership to another party is generally part of which stage? O a. the placement stage ob. the layering stage oc. the transference stage od. the integration stage
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Suppose you plan to purchase one share of a stock in June. You use a long futures contract in January to hedge your position. The long futures contract matures in June. Futures price is $78 initially. After two months, you decide to close out your position. Interest rate is assumed to be 4% per annum, continuously compounded . Dividend yield is 6%

Consider the two mutually exclusive investment projects given in the table below for which MARR=15%. On the basis of the IRR criterion, which project would be selected under an infinite planning horizon with project repeatability likely? Assume a financing rate of 10%. Net Cash Flow n Project A - $5,000 0 Project B - $10,000 $8,000 $8,000 1 $3,000
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Latvia is a small country in Northern Europe on the Baltic Sea. Latvia joined the European Union in 2004 and adopted the euro as its currency in 2014. The questions below refers to the time period before 2014, when Latvia pegged its currency to the euro. Suppose Latvia credible pegs its currency to the euro which means that the rate of

A mutual fund has a front-end load of 6%. There is $10,500,000 in assets and $500,000 in outstanding liabilities and one million shares outstanding. Which of the following statements would be true? a) NAVPS would be $10 b) NAVPS would be less than $10 NAVPS cannot be calculated d) NAVPS would be greater than $10
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Imprudential, Inc., has an unfunded pension liability of $650 million that must be paid in 17 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 8.5 percent, what is the present value of this liability? Multiple Choice $149,415,494 $159,159,983
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1. Total Sales per quarter 2. Net sales for each city 3. Compare the sale for each city using the histogram (Show the graph of a histogram) 4. Create the pie-chart for each quarter and total sales (Show the pie-chart) To get full credit in the assignment, you must City Name Quarter 1 Quarter 2 Quarter 3 Quarter 4 Net Sales Miami 53157 37874 33254

Vail Venture Investors, LLC is trying to decide how much percent equity ownership in Black Hawk Products, Inc. it will need in exchange for a $5 million investment. Vail Venture Investors has a target compound rate of return of 30 percent on venture investments like Black Hawk Products. Depending on the success of products currently under

Milton Industries expects free cash flow of $4 million each year. Milton's corporate tax rate is 21%, and its unlevered cost of capital is 16%. Milton also has outstanding debt of $12.61 million, and it expects to maintain this level of debt permanently. a. What is the value of Milton Industries without leverage? b. What is the value of Milton
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A bank sells a "three against nine" $4,100,000 FRA for a six-month period beginning three months from today and ending nine months from today. The purpose of the FRA is to cover the interest rate risk caused by the maturity mismatch from having made a three-month Eurodollar loan and having accepted a nine-month Eurodollar deposit. The agreement
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Exercise 4. A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a (risk-free) rate of 8%. The probability distribution of the risky funds is as follows: a Fund Stock fund (S) Bond fund (B) Expected
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8. Problem 11.17 (Capital Budgeting Criteria) eBook Problem Walk-Through A company has a 13% WACC and is considering two mutually exclusive investments that cannot be repeated) with the following cash flows: ( 0 1 2 3 3 4 5 6 7 -$300 Project A Project B -$387 $132 -$193 $132 -$100 $132 $600 $132 $600 $132 $850 $132 -$400 -$180 $0 a. What is each
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- This example is part of "Hedged Portfolios" to minimize risk. - Assume you have $10,000 to invest; - A stock is trading at $80.00. - A call option that expires in one year with a strike price of $80.00 is trading at $10.00. What is your portfolio's 1-year return if you invest in "Only Options" and the the stock price after one year is $105.00?
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