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Finance Questions and Answers May 26, 2017

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Suppose the risk premium on the market portfolio is estimated at 7.5%. what is the risk premium on a portfolio invested 50% in Microsoft with a beta of 1.2 and 30% in Delta with a beta of 0.8. The rest of the fund is invested in Gold which has zero beta. What is the expected return for the portfolio?

Colin would like to send her parents on a cruise for their 25th wedding anniversary. She has priced the cruise today at $15,000 with inflation set at 5% annually for the next 5 years. Colin has 5 years to accumulate this money. How much must Janice deposit annually in an account paying 10 percent interest in order to have enough money to send her

The question has two parts, but its only one question please answer all A developer has two mutually exclusive investment opportunities. One in Ohio and one in Michigan. The cash flows from the opportunities are expected to be as follows: Ohio Michigan -4338 1000 Initial Investment Year 1 Year 2 Year 3 -2500 1000 1000 1000 1000 3000 What is the
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When a firm estimates future taxes, it should consider the: combined tax rate. average tax rate. marginal tax rate. historic tax rate. When a firm estimates future taxes, it should consider the: combined tax rate. average tax rate. marginal tax rate. historic tax rate. When a firm estimates future taxes, it should consider the: combined tax rate.
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Question 28 20 pts Choose an element of the marketing mix and describe how marketing could violate ethical standards relating to it. How could this be avoided? Choose a second element of the marketing mix and describe how marketing could violate ethical standards. how could this be avoided? Finally, explain why is sustainability considered an
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The Caffeine Coffee Company uses the modified internal rate of return. The firm has a cost of capital of 11 percent. The project being analyzed is as follows ($44,000 investment): Use Appendix A and Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow 1 $ 22,000 2

Why is the after - tax cost of debt rather than its before - tax required rate of return used to calculate the weighted average cost of capital? Explain.

If the return on your stock (AMC) equals the expected return indicated by the CAPM next year (as computed in B.1) and then suffers a return of negative 60% in the subsequent year, what is the geometric average return on the stock over those two years (i.e., the compounded annual return)? B.1 Answer = 2.93%

What is opening book value? Calcluate: NPV: IRR: Payback Period (2 decimal places): Profitability index (2 decimal places)

A well-defined introduction of the investment philosophy and the current significance of the investment philosophy in the financial market, an introduction of the assigned investor, including background and relevant experience on Investment in Innovation and Technology by Kathie Wood (ARK) and also include success/failure stories of the assigned

To calculate the intrinsic value of these stocks, you might be inclined to use a dividend valuation model on which stocks? Ticker Projected growth rate Beta AHC 10% 0.9 CW 25% 2.2 ATP 30% 1.5 HOTD 80% 1.8 R 6% 0.8 Assume the risk free rate is 5% and the market is expected to return 10% next year. Calculate the intrinsic value of the stocks you

Don Draper has signed a contract that will pay him $55,000 at the end of each year for the next 6 years, plus an additional $120,000 at the end of year 6. If 7 percent is the appropriate discount rate, what is the present value of this contract? 2. Selma and Patty Bouvier are twins and both work at the Springfield DMV. Selma and Patty Bouvier

D Question 6 1 pts Rose Corp. issued a bond 5 years ago with a 10% annual coupon rate. Today the bond has 5 years to maturity. The bond's required (market) rate is 12%. If the market rate of this bond is expected to be 10% 3 years from now, what is the price of the bond 3 years from now? $849.59 O $904.04 O $1,000 $966.20
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6. Chapter Problem 10.10 (WACC), Section Problem 10.10 (WACC), Problem Problem 10.10 (WACC) ebook Olen Outfiters Inc believes that its optimal capital structure consists of 45% comman equity 55 debt and its tax rate is 25. Oisen must raise additional capital to fund is upcoming expansion. The form will have $1 million of retained earnings with a
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COPY AND ANSWER 1. A man paid 10% downpayment of P 200,000 for a house and lot and agreed to pay the 90% balance on monthly installment for 60 months at an interest rate of 15% compounded monthly. Compute the amount of the monthly payment (15 Points) 2. Today, a businessman borrowed money. to be paid in 10 equal payments for 10 quarters. If the
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Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $0.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 70% per year - during
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You observe the following bond trading in the market for 10,540 Face value of 10,000, 4 years to maturity, and 6 coupon. What is the yield to maturity Please be sure to express your answer as a percentage without the sign.
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4 5 What are the five most frequently used current liabilities?and 1 Current liabilities are usually incurred mostly for financing activities. True or false? 2. What does the accounts payable turnover ratio measure? What is the equation used to express accounts payable turnover (T/O) in days? 3. Expressing the turnover ratio in terms of the
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A company is currently experiencing a very successful period and will pay its first dividend of $10 per share. Due to the companys success, the dividend is expected to grow at a rate of 16.21% for five years. Then, it will level off and grow at a constant rate of 6.68% each year. Assume the discount rate for this company is 7.55%. What is the

Your company plans to maintain a constant debt to equity ratio and currently has a debt to equity ratio of 1:3. The cost of equity is 11% and the cost of debt is 2%. The tax rate for this company is 30%. What is the cost of assets for this firm?

(Calculating rates of return) Blaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year Blaxo's common stock was selling for $17.67 but by year end it was only $15.01. If the firm paid a total cash dividend of $2.31 during the year, what rate of return would you have earned if you had purchased the stock exactly
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Why even with all corporate controls, firms still experience frauds and unethical behavior from employees. Explain reasons from employer perspective and explain reasons from employee perspective?

0.4 (Totul 20 marks) A company has 7 million ordinary shares outstanding and the book value per stare is $8. The company also has 4400 bonds issue outstanding and each bond has a face value of $25.000 The tax rate is 30 per cent. Find the following: 1 - What are the company's capital structure weights, the equity and debt? (12 marks) 2- What is
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6. Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 25%. Assume that the firm's cost of debt, rd, is 10.5%, the firm's cost of preferred stock, rp, is 9.7% and the firm's

FIN300, easy. pretax cost of debt, aftertax cost of debt Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 23 years to maturity that is quoted at 93 percent of face value. The issue makes semiannual payments and has an embedded cost of 7 percent annually. a. What is the company's pretax cost
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-1 points SmithNM13 11 1.032 6 Find the total amount that must be repaid on the following note described. $8,593 borrowed at 15.5% simple interest What is the total amount to be repaid 3 years, 125 days later? (Round your answer to the nearest cent.) $ Need Help? Talk to a Tutor Read It Practice Another Version Save Progress Submit Answer 1 points
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What is the purpose of L'Hopital's Rule? a ) To find the limit of a quotient of two functions when both the numerator and denominator approach zero or infinity. b ) To find the derivative of a product of two functions. c ) To find the integral of a product of two functions. d ) To find the area under a curve.

Return on Equity is said to be one of the most important ratios under management's control. How do other ratios impact ROE? What role does DuPont analysis play and what might it miss? Given the state of the world right now what else should managers be focusing on other than ROE? Find an example of a company that's splitting their focus well right

Rudolf Astor transferred securities early this year to his favorite grandson, Rudolf Astor III. Which of the following statements is (are) correct concerning the taxation of this transfer? (Topic 66-2) I The transfer is subject to the generation-skipping transfer tax. II The transfer is subject to the federal gift tax. (A) I only (B) Both I and II

Ad valorem taxes may apply to which of the following? Real estate. Business inventories. Business automobiles. All of these.
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eBook Chapter 1:2 Financial Planning Exercise 2 Calculating key financial ratios Selected financial information about Backpacking Resources, Inc., is as follows: Total assets Total liabilities Total preferred stock Total annual preferred stock dividends Net profits after tax Number of shares of common stock outstanding Current market price of
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What is the rate of return of an investment of $22,334 if after 6 years it becomes $34,233.

Your goal is to have $20,000 in your bank account by the end of nine years. If the interest rate remains constant at 9% and you want to make annual identical deposits, how much will you need to deposit in your account at the end of each year to reach your goal? (Note: Round your answer for PMT to two decimal places.) O $1,535.98 O $1,075.19 O
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1- Technical Analysis OF (CAT) COMPANY 1- Financial Health of the company 2- Valuation- is it fairly price Would you buy this stock as a Div stock?? Thank you please answer in detail with pictures and site usage 1- Chart stocks 2- yahoo finance

Which of the following financial assets would be most susceptible (vulnerable) to a decline in value if interest rates increased ? A a short term fixed income financial asset (ex. short term bond) B a long term fixed income financial asset (ex. long term bond) C a long term variable interest rate income financial asset D they would all be

Suppose the dividends for the Seger Corporation over the past six years were $ 1 . 0 6 , $ 1 . 1 4 , $ 1 . 2 3 , $ 1 . 3 1 , $ 1 . 4 1 , and $ 1 . 4 6 , respectively. Assume that the historical average growth rate will remain the same for 2 0 1 7 . Compute the expected share price at the end of 2 0 1 7 using the perpetual growth method. Assume the
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I need 100% correct answer will be upvote Banca Antiniana from Naples, Italy, needs to calculate the risk level of several bond portfolios. Particularly, the bank needs to measure and hedge the risk of portfolios containing both bonds and swaps. What are the instruments which will be used in the calculation? Barbara Stapleton has recently joined
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Which ONE of the following statements about behavioural finance is FALSE? Behavioural finance proposes that asset prices may not equal their correct values due to limits to arbitrage (Tick this option if you think that none of the statements listed are false.) Behavioural finance is an area of finance that deals with the implications of reasoning
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please respond quick Question 5 (2 points) Please identify the proper name of the financial ratio or identity defined by the formula show below: = (1 - Dividend Payout Ratio) Total Debt Ratio Edidity Multiplier Quick Ratio Retention Ratio Question 24 (2 points) Frank's Landscaping Services, Inc. has Net Income of $1,485.52, Total Assets of
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Can someone help with the steps on how to do this in excel ASAP (4 points) You are planning to invest your money in Stock A and Stock B. 1) (1 point) Find the min variance portfolio of Stock A and Stock B using the SOLVER function. Provide the portfolio weight of Stock A for the min variance portfolio. Provide the mean and standard deviation of
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myPlymouth + c bu x 9 Not sec Do Homework - Zak Murray - Google Chrome mathxl.com/Student/PlayerHomework.aspx?homeworkld=554717316&questionid=5&flushed=false&cid=5866217¢erwin=yes BU-3210-05 Zak Murray & 03/30/20 11:51 AM Main Menu Save Assignments Homework: Assignment 5 Score: 0 of 10 pts B9-8 (book/static) Do Homework 5 of 10 (2 complete) HW
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a 5. Viking Bank in Minnesota has the following Earnings and Profitability Analysis section on its Uniform Bank Performance Report for 2020 and 2019. OROA Analysis: Profitability Analysis: % of Average Earning Assets 12/31/2020 12/31/2019 Bank PG1 Bank PGI IR% 4.54 3.47 4.48 3. 33 IE% 1.17 092 091 70 NIM% 3.36 2.54 3.57 2.61 NIR% 2.04 1.56 2.11
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7 Fixed costs for the firm average $170,000 annually. a. What is the break-even point in units for the company? b. What is the dollar sales volume the firm must achieve to reach the break-even point? c. What is the degree of operating leverage for a production and sales level of 4,000 units for the firm? (Calculate to three decimal places.) d.
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YO VUN year Accounts payable 41,400 45,000 Accounts receivable 115,200 122,400 Accruals 16.200 13,500 Additional paid in capital 200,000 216,650 Cash 272 777 Common Stock @ par value 37,600 42,000 COGS 131,400 179,515.00 Depreciation expense 21,600 22.218.00 Interest expense 16,200 16.999.00 Inventories 111,600 115,200 Long-term debt 135,000
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The Chief Executive Office ( CEO ) of a corporation can be removed by the creditors by the Chief Operating Officer ( COO ) or the Chief Financial Officer ( CFO ) by the board of directors directly by the shareholders by the federal government only
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Answer question 4 only. Thanks. Consider a MPT created from the below pool of loans. If these loans are all fully amortizing FRMs, what is the WAC? 5.50%6.00%4.75%6.50% QUESTION 4 Now imagine that these loans whose origination values are listed above are seasoned for 24 months before creating a MPT. What is the WAM? Assume that all loans are fixed
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AN INTRODUCTION TO COST TERMS AND PURPOSES 2-38 Cost of goods manufactured, income statement, manufacturing company. Consider the follow account balances (in thousands) for the Carolina Corporation: End of Beginning of 2017 124,000 173,000 240,000 2017 Carolina Corporation 73,000 Direct materials inventory 145,000 Work-in-process inventory 206,000
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Determine the future value of the following series of cash flows, assuming a money growth rate of 10% compounded annually: year 1 $2,200; year 2 $1,500; year 3 $1,500; year 4 $1,750. Show step-to-step process

The dealer forecasts that two days from now the discount rate on an 88-day bill will be 5.10%. The current discount rate on a 90-day bill is 5.10%. What is the highest two-day repo rate the dealer can afford to pay and still expect to break even? Explain

Problem 13-3 Calculating Cost of Debt Jiminy's Cricket Farm issued a 25-year, 4.7 percent semiannual bond 2 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 22 percent. a. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal
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Please show all work!!!! Will upvote 100% 3. It's time to get a new laptop. The laptop is $2250. You could put money aside for it each month for one year. If you put the money in an account that earns 5%, how much will you have to save each month? (4 points) What are the total acquisition costs? (1 point)
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z Microsoft has a dedicated page that sells cloud storage services to businesses. However, when a user types "business cloud storage services", the page that ranks on Google's organic search results at the top is their personal cloud services page. In this case, the personal cloud services page is the: A. Preferred Landing Page OB. Home Page C.
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I Q5 B. (20 Marks) Would you rather receive $1,000 a year for 10 years or $800 a year for 15 years if a. The interest rate is 5 percent b. The interest rate is 20 percent c. Why do your answers to (a) and (b) differ
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14 Derek decides to buy a new car. The dealership offers him a choice of paying $515.00 per month for 5 years with the first payment due next month, or paying some amount today. He can borrow money from his bank to buy the car. The bank requires a 6.00% interest rate. What is the most that he would be willing to pay today rather than making the
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Problem 22-13 A firm, whose cost of capital is 10 percent, may acquire equipment for $119,445 and rent it to someone for a period of four years. a. If the firm charges $39,330 annually to rent the equipment, what are the net present value and the internal rate of return on the investment? Use Appendix D to answer the questions. Use a minus sign to
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It is January 1st, 2023. You are a senior analyst at America Coffee House Inc. (ACH), a leading coffee chain and wholesaler of coffee/bakery products in North America. The CEO of America Coffee House, Susan Matthews, has reached out to you to look at two options regarding an investment, building on your analysis from Assignment 1 and Assignment 2.
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true or false 10. A company's market value is $25,000,000. It achieves an ROE of 4%. Its earnings are $1,000,000 11. The more volatile the price of a security, the wider the bid-asked spread dealers will quote (charge) for the security. 12. A broker purchases securities from a seller and sells them to a buyer. 13. Company C established a $1
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Estimate Bartman's and Reynolds's betas by running regressions of their returns against the index's returns. Round your answers to four decimal places. Bartman's beta: fill in the blank 30 Reynolds's beta: fill in the blank _ Assume that the risk-free rate on long-term Treasury bonds is 5.5%. Assume also that the average annual return on the
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what is not clear? thats the question and i've posted all the info available to me 0 Question Help You are considering an investment project with the financial Information provided below. Suppose the company is most concerned about the impact of its price estimate on the project's rate of return. How would you address this concern? Click the icon
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Can you show work/formulas 6 The managers of United Medtronics are evaluating the following four projects for the coming 7 budget period. The firm's corporate cost of capital is 14 percent. 67899HQBHBTB99999 Project Cost IRR 10 A $15,000 17% 11 B $15,000 16% 12 $12,000 15% 13 D $20,000 13% 14 15 a. Assuming that all four projects have average
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The Board of Directors: O A. is comprised of over 100 members including the governor, the senior deputy governor and the deputy minister of finance. B. reappoints themselves for a term of eight years. C. reports directly to the Governing Council. D. has an overall responsibility for the operation of the Bank of Canada
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Using General Motors finance I need to solve the following ratios: Current Ratio = Current Assets / Current Liabilities Acid-Test Ratio = Current Assets Inventories / Current Liabilities Average Collection Period = Accounts Receivable X 365 / Annual Credit Sales Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

Evaluating liquidity) The Tabor Sales Company had a gross profit margin gross profits sales) of 30.4 percent and sales of $9.4 million last year. Seventy-five percent of the firm's sales are on credit and the remainder are cash sales, Tabor's current assets equal $2.7 milions cument s equal $288.000, and it has $101,000 in cash plus marketable
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PLEEEEASE Not yet answered Points out of 4.00 P Flag question With APV model, the company should: (1) Discount interest tax shields at (2) Discount depreciation tax shields at (3) Discount operating cash flows at (4) Discount terminal value at (4) Discount terminal value at Cost of debt=6% Cost of debt=6% All-equity cost of capital=12% All-equity
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(need E,F, and G answered) A 20 year, $1000 par, 6.5% semi-annual coupon bond priced at 89.725% of par. The bond is callable after 6 years at 110.5% of par and has a conversion ratio of 45. The bond can be converted to stock anytime up until the call date. a) (2 points) What is the bonds yield to maturity? 7.50% b) (2 points) What is the current

A new (2 year) project would require the purchase of new equipment today at a cost of $9000. The equipment would be depreciated on a straight-line basis over its 2-year useful life to a book value of $6000. At the end of the life of the project (at the year 2 point), the machine will be sold for an estimated $1000. The project will cause an

Schweser Satellites Ine produces satellite earth stations that sell for $110,000 each. The firm's fixed costs, F, are $3 milion, 50 earth stations are produced and sold each year, profits total $600,000, and the firm's assets (all equity financed) are $5 milion. The firm estimates that it can change its production process, boding $4 milton to
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Deere Construction just purchased a new track hoe attachment costing $10,000. The CFO, John, expects the implement will be used for five years when it is estimated to have a salvage value of $2,500. Maintenance costs are estimated to be $0 the first year and will increase by $100 each year thereafter. If a 12% interest rate is used, what is the

A primary benefit of ______ is to be able to identify the specific factors that drive ROE and use this to compare sources for ROE differences between firms. A. Market analysis B. DuPont Decomposition of ROE C. Technical analysis D. Leverage analysis

Foreign financial markets 1. A US investor purchased stock in a Canadian company on May 1, 2018 for C$82.15. The investor sold the stock on June 29 for C$88.75. What is the investors percentage return on the investment in Canadian dollars? 2. If the exchange rate for the Canadian dollar wat 1.2940 on May 1 and 1.2268 on June 29, what is the

Laurel's Lawn Care Ltd., has a new mower line that can generate revenues of $144,000 per year. Direct production costs are $48,000, and the fixed costs of maintaining the lawn mower factory are $19,000 a year. The factory originally cost $1.20 million and is being depreciated for tax purposes over 25 years using straight-line depreciation.
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Share X is expected to pay a dividend of R8 out of earnings of R28 in one years time. The company is mature and expected to grow at a constant rate forever. If the share is currently trading at R200 and the market capitalisation rate is 9%, calculate the return on equity (ROE) for the share.

An increase in the depreciation expense will do which of the following? I. increase net income II . decrease net income III. decrease EBIT IV . increase EBIT

Please identify at least FOUR problems related to data quality on the spreadsheet below. For each one, please also indicate... 1. why it is a problem, and 2. what should be done to address the issue before analyzing it. Al fr Name A B date of birth GPA Name 2 3 Taylor, Sam 4 Lee, Janice 5 Peters, John 6 Harrison, Theo D Grade K201 Y2K A- E Grade
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Convexity in bond prices is caused by the: Convexity in bond prices is caused by the: curvature around the bond price yield relationship. change in default probability associated with a yield change. CGAP effect. coupon changes on a bond. mismatch between the duration of the assets and liabilities.

Hank and Irene are married and will file separate returns. Irene will be claiming itemized deductions on her return. what is the amount that Hank can claim as a standard deduction?

3. (a) Explain the similarities and differences between being the short party of a forward contract and being the holder of an American put option contract. [6 marks] Suppose St is the price of a company's share at time t. Let at time t, Ct be the price of a European call option contract and pt be the price of a European put option contract on the
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I am stumped with how to answer this question. Please help me! Mary comes up with a great idea for an iPhone application. She works on it for three months in her spare time. She creates sketches and designs, trying to figure out how it would work. She looks at other iPhone apps doing related things. About three months into it, her interest in the

Tuscaloosa is evaluating whether to add solar panels to all its school buildings throughout the city as away to reduce energy costs. The cost of this capital program would be $15 million per year for 5 years (i.e., $15 million in year 0, $15 million in year 1, etc.). It is expected that energy cost savings would be the following: Year 1: $3

Assume Tesla buys 100 robots that cost $100,000 each. They believe the robots will have useful lives of 10 years and that they will be able to be sold for parts at that time for $10,000 each. Assuming Tesla uses diminishing depreciation calculations with an acceleration factor of 2, What depreciation will Tesla report on the 100 robots in the

Lerner Tech is planning to go public and sell 500,000 shares. Lerner Tech's forecasted EBIT for next year is $400,000. Lerner Tech has $120,000 debt in the form of bank loans. Penn Tech, a public company that is similar to Lerner Tech in terms of its productive assets, has 1,100,000 shares outstanding. Penn Tech's shares are traded at $6 per

What is the price of a bond with a $1,000 face value, 8% coupons (annual payments), and 15 years to maturity if the yield is 6%? What is the price of a bond with a $1,000 face value, 8% coupons (annual payments), and 15 years to maturity if the yield is 9.5%? What is the price of a bond with a $2,500 face value, 6% coupons (annual payments), and 8

Jon establishes a long position of one T-bond future today for a settlement price of 10102. The exchange requires an initial margin of $2700 and a maintenance margin of $2500. Below are the next two days closing price on this contract. Day 1: settlement price10103 Day 2: settlement price 10102 The margin account balance after two days is

10. Which of the following stocks is more risky? Stock) Stock E Return 19% 15% Standard deviation of return 13% 11% * (4 Points) Stock Stock E O cannot determine due to insufficient information 11. You own a portfolio consisting of 35% Treasury bills and 65% stock Q. The return for Treasury bills is 3%. Stock Q has a return of 8% and a standard
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Show work and calculation formula screenshot in excel Estimate each property's current value by calculating the present discounted value of expected future cash flows given to you in Exhibit 11 (Screenshot below). To complete your valuation, you will need to make an exit cap and discount rate assumption. For Columbus Festival, assume that the exit
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Capital One is advertising a 5 year, 6% APR motorcycle loan. Payments will be monthly at the end of each month. If you need to borrow $11,000 to purchase your dream Harley Davidson, what will your monthly payment be?

At date t = 0, we observe the following zero-coupon rates in the market: Maturity Liquidity R(0,t) Premium L(t) t 1 4.000% 5.000% 0.200% 2 3 5.500% 0.275% 4 6.690% 0.325% 5 7.150% 0.350% Taking into account these rates and liquidity premia, what is the 1-year maturity future rates expected by the market Fa(0,4,5)? Answer in percentage with 3
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5. Salt Water Zoo spent $11,300 on a marketing plan for a potential project that is expected to generate sales of 1500 units of a self-cleaning aquarium at a selling price of $150 each and variable cost of $85 per unit. Annual fbxed costs are $28,400 and with an annual increase in net working capital of $22,800 that will be returned at the end of
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When performing a linear regression of the relationship between changes in spot prices and changes in futures prices, what does R 2 = 0 indicate? A. Changes in the spot rate and changes in the futures price are perfectly correlated. B. All observations between changes in spot rate and changes in futures price lie on a straight line. C. The spot

When a target variable is categorical, the CART algorithm produces a __________ tree to predict the class memberships of new cases. classification pruned minimum regression Which tree is the least complex and contains the smallest validation error? categorical tree full-grown tree minimum error tree best-pruned tree

Benton Industries stock has a beta of 1.2. The company just paid a dividend of $.50, and the dividends are expected to grow at 6 percent per year. The expected return on the market is 11 percent, and Treasury bills are yielding 6.5 percent. The current price of the company's stock is $82. a. Calculate the cost of equity using the DDM method. (Do
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- + Ait to pa 1. General Motors exports cars to Spain, but the strong dollar against the euro hurts sales of GM cars in Spain. In the Spanish market, GM faces competition from Italian and French car makers, such as Fiat and Renault, whose operating currencies are the euro. In other words, these Italian and French competitors in the Spanish market
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Example 1: Use the following information to answer the next FIVE questions. The Global Advertising Company has a marginal tax rate of 40%. The company can raise debt at a 12% interest rate. The last dividend paid by Global was $1.10. Globals common stock is selling for $8.30 per share, and its expected growth rate in earnings and dividends is 4%.

True or False: Firms have an optimal capital structure. Explain your answer

ABC is considering a project which costs $1 million and has a base-case NPV of exactly zero (NPV = 0). (A negative answer should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars.) a. If the firm invests, it has to raise $540,000 by a stock issue. Issue costs are 15.85% of net proceeds. What is the project's APV?
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Stock Expected Return 13% 19 Beta 0.85 1.35 Firm-Specific Standard Deviation 30% 39 The market index has a standard deviation of 19% and the risk-free rate is 10%. a. What are the standard deviations of stocks A and B? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock A Stock B b. Suppose that we were to
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Parker has two options for buying a car: Option Ais 1.1 APR mancing over 72 months and Option 31 APR over 72 months with 3300 Cash back, which he would use as part of the down payment the prisothea 27.097 and Parker has saved S2700 for the down payment Find the total amount Parker will spend on the car for each options to many nayments. Round your
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A project has an initial cost of $59,000 and is expected to generate a single cash inflow of $69,000 in 7 years. What is its IRR? Round to the tenth of a percent (e.g. 5.6%=5.6).

An oll-drilling company must choose between two mutually exclusive extraction projects, o and each requires an initial outlay at t = 0 of $12.4 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $14.88 million. Under Plan B, cash flows would be $2.2034 million per year for 20 years. The firm's WACC
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A project cost 14,500 today. If you invest in this project, you expect to receive 3,400 one year from now, 6,500 two years from now, and 9,000 years from now. No other cash flow will occur. Assume the applicable discount rate is 18%. A. What is the net percent value of the project. B. should you invest in this project (yes or no) C instead of

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