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Finance Questions and Answers April 29, 2016

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Why would a bank sell a package (portion) of its loans? OA) to decrease liquidity B) to decrease the size of its loan portfolio C) to increase current earnings by selling loans whose book value exceed their market value D) all of the above E) none of the above
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One year ago, your company purchased a machine used in manufacturing for $ 1 0 0 , 0 0 0 . You have learned that a new machine is available that offers many advantages; you can purchase it for $ 1 5 0 , 0 0 0 today. It will be depreciated on a straight - line basis over 1 0 years, after which it has no salvage value. You expect that the new
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An analyst believes that the economy is approaching the end of the contraction phase. Her IPS stipulates that she must hold a minimum of 15% in fixed income securities. What types of changes should she make to her portfolio? Increase equity beta and decrease fixed-income duration Increase equity beta and fixed-income duration Decrease equity beta

Currently, the term structure is as follows: One - year bonds yield 1 1 . 5 0 % , two - year zero - coupon bonds yield 1 2 . 5 0 % , three - year and longer maturity zero - coupon bonds all yield 1 3 . 5 0 % . You are choosing between one, two, and three - year maturity bonds all paying annual coupons of 1 2 . 5 0 % . You strongly believe that at

What is the EAR for the 2021-2022 period? 1. Spark has paid the following dividends during 2021-2022: The price of Spark shares at the start of 2021, 2022, and 2023 are
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Nestl of Switzerland Revisited. Nestl of Switzerland is revisiting its cost of equity analysis. As a result of extraordinary actions by the Swiss Central Bank, the Swiss bond index yield (10-year maturity) has dropped to a record low of 0.53%. The Swiss equity markets have been averaging 8.40% returns, while the Financial Times global equity
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4. Calculating the effects of investing pretax or after-tax dollars in accounts that are or Aa Aa are not tax sheltered Alison just started learning about options for non-tax- sheltered accounts? pre-tax dollars? saving for her retirement. Her friend is a big fan of tax-sheltered accounts. after-tax dollars? Why do you suppose that is? Check all
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Instructions Assignment 2 Partnership Synopsis (CO2 The assignment for this week has 2 parts. First, you are to illustrate, as in a flow diagram, the role of your chosen company in a strategic alliance with your own company and that of your target market. Additionally, you are to produce a synopsis of the company's function and the type of

1) (3 pts) A portfolio's returns are forecasted to have the following distribution: Demand for the Company's Products Weak Average Strong Prob. Of this Demand Occurring Rate of Return if this Demand Occurs 4% 9% 15% 25% 60% 15% Calculate the expected return of the portfolio. Expected Return =
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Your grandmother gives you $100,000 (nice huh?) to be invested in in one of three opportunities: Real Estate Bonds Zero Coupon Bonds If you invest the entire $100,000 in one of these choices with the expected cash flows shown below, which investment offers the highest NPV? Use a 11% discount rate for all three for simplicity. nvestment Year 1 Year

24. Atlanta Co. is producing motorcycles and selling them to U.S. customers. Atlanta Co. obtains all of its supplies from American firms and has no competition in the United States and one major competitor in Japan. Phoenix Co. is producing office furniture and obtains its supplies from a Canadian firm. Based on the above and Phoenix Co. has
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An Fl has a $270 million asset portfolio that has an average duration of 7.8 years. The average duration of its $230 million in liabilities is 4.6 years. Assets and liabilities are yielding 15 percent. The Fl uses put options on T-bonds to hedge against unexpected interest rate increases. The average delta (5) of the put options has been estimated
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The nominal rate of interest is made up of: a. the discount rate and the compensation for inflation 0 b. the compensation for the level of international borrowing 0 c. the real rate of interest and the compensation for inflation 0 0 d. the exchange rate Next Question The total value of a firm is $2,000,000 and it has $500,000 debt. The cost of
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Bright Lighting Company is unlevered with 2 million shares outstanding and total cash flow before taxes of $525,000. Compute Bright s taxes owed if all corporate income is taxed at 34 percent. $346,500 $178,000 $150,000 $178,500 $125,000 . Compute Bright s net income after tax if all corporate income is taxed at 34 percent. Compute Bright s

The value of an investment after it earns interest for one or more periods is termed Present Value Future Value oo oo Discounting Value Compounding Value
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You are a project manager. You are estimating the cash flows of a potential project that requires an investment of $200,000, including installation cost, and $30,000 in working capital, which will be fully recaptured at the end of the project. The machine has an estimated life of six years and will be depreciated via the simplified straight-line

Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of ra = 9% as long as it finances at its target capital structure, which calls for 45% debt and 55% common equity. Its last dividend (Do) was $2.35, its expected constant growth rate is 4%, and its common stock sells for $24. EEC's
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answe 21-22 0 You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of $5 million and cost of goods sold of $3 million. You will be depreciating a $1 million machine for 5 years using straight-line depreciation. Your tax rate is 35%. Finally, you expect working capital to increase from $190,000 in year 2
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A collar is established by buying a share of stock for $54, buying a six-month put option with exercise price $47, and writing a six-month call option with exercise price $61. Based on the volatility of the stock, you calculate that for an exercise price of $47 and maturity of six months, ald= 0.7298, whereas for the exercise price of $61, (da) =
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When k is 5%, the price of KLM bond is $1,045. And when k rises to 6%, the price of KLM bond drops to $907 [ k is the discount rate or yield-to-maturity]. If Chip pays $980 for this bond, how much is the yield-to-maturity. [use the interpolation technique][All answers are rounded to the nearest 4 decimal places] 4.4348% 5.4710% 7.3000% 5.4348%
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6. What is the yield of a bond with a face value of $1000 purchased for $900 with an interest of 9\%? (2 marks) A. Greater than 9\% B. Less than 9% C. Equal to 9% D. Equal to 0 7. Issuing too many common stocks may cause dilution of the current ownership structure as common stockholders have voting rights. (1 mark) A. True B. False
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A stock has an expected teturn of 11.8%. Given a risk-free rate of 2% and a market return of 8.3%, what is the 8 of this stock? Enter your answer rounded to 2 DECIMAL PLACES 8 Number
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Homework: HW_8 (Based on Chapter 9) Score: 0 of 1 pt 7 of 10 (2 complote) P9-10 (similar to) Cost of common stock equity Ross Texoiles wishes to measure its cost of common stock equity The firm's stock is currently seling for $55 63. The firm just recently paid a dividend of $403. The After underprong and station costs the firm expects to net $51
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Question 4 (1 point) Listen Henry would like to have a retirement income of $3,000 per month (month-end payments). How much must he have in his retirement fund on the day that he retires if he plans to live for 28 years? Assume that the account will earn j12=3.6%. Your Answer: Answer Question 5 (1 point) B) Listen While he is in college, Steve is
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Using the capital asset pricing model, the cost of common stock equity is the return required by investors as compensation for price volatility of the stock . a firm's diversifiable risk C the specific risk of a firm D a firm's systematic risk
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You bought a six-year bond issued by Wildhorse Corp. four years ago. At that time, you paid $971.33 for the bond. The bond pays a coupon rate of 8.125 percent, and coupon payments are made semiannually. Currently, the bond is priced at $1,026.56, What yield can you expect to earn on this bond if you sell it today? (Round answer to 2 decimal

Quad Enterprises is considering a new 4-year expansion project that requires an initial fixed asset investment of $5.778 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will be worthless (TIP: "worthless" = not sold, and so no sales proceeds are generated). The project is estimated
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please show work without using tvm solver 19. Fiction Corp. just paid an annual dividend of $2.34 per share. The company expects to increase its dividend by 2.8% per year indefinitely. If investors require a return of 9.45%, what is the expected price of the stock twenty-five years from now? (2 points)
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Lecture material: The Just Noticeable Difference (JND) is the minimum amount of change in a stimulus that can be detected. Using sound as an example, if a decibel level change from 60 decibels to 62 decibels is undetectable and a change from 60 decibels to 63 decibels can be detected, we know that at an initial stimulus of 60 decibels, a change of

please help BIU.L.A. ESSE Merge & Center - $ %, Painter 8 6 Conditional Format -0.0 Cell Formatting as Table - Styles Styles Font Alignment Number for B D E F G H $ Year Price EPS CFPS SPS 2014 2015 2016 2017 2018 92.00 $ 97.40 $ 103.00 $ 104.50 $ 110.00 $ 4.10 4.15 4.90 5.20 6.80 6.50 7.80 8.40 9.25 11.60 52.60 $ 58.52 $ 57.90 $ 60.69 $ 71.60 $
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Anthony Ltd. prepares monthly cash budgets. The following information is available for the company: JulyAugustSales$357,000$404,000Direct materials purchases$119,000$111,000Direct labour$84,000$112,000Manufacturing overhead$69,000$89,000Selling & administrative expenses$76,000$80,000 The following additional information is available: a. Sales are

If the capitalization rate is 8% and the value is $2,250,000, what is the net operating income? $18,000$180,000$200,000$28,125,000 Question 19 5pts Which of the following property types would be applicable for the income capitalization approach? Owner Occupied Office Building Multifamily Community Church School What is the total annual rental
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The Petersik family is considering purchasing a second home to use for short term rentals near the beach. If it purchases the house, they will place a down payment of $60,000 on the house. They estimate they will get an annual net rental profit of $9,500 after their mortgage and expenses are paid. After 18 years, they plan to pass the rental home
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(Yield to maturity) A bond's market price is $825. It has a $1,000 par value, will mature in 6 years, and has a coupon interest rate of 12 percent annual interest , but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 12 years? What if it matures in
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Nike is expecting a payment of 10 mio in 6 months (they are long GBP). The Forward is: $1.2000/ Nike Purchases a 6 month Put/$ Call Struck at $1.2000/, for $.05/ How much will it cost them to buy the GBP put, and what is the break even on the ENTIRE position (the expected revenue + the option premium)? Hint: remember the gain and the breakeven
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Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 9.42 % 15 % 0.8 B 11.38 15 1.2 C 13.34 15 1.6 Fund P has

A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,737.00 to install, $5,128.00 to operate per year for 7 years at which time it will be sold for $6,925.00. The second, RayCool 8, costs $41,407.00 to install, $2,021.00 to operate per year for 5 years at

Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $60,000 has today. He wants all of his subsequent retirement payments to be equal to his first