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Finance Questions and Answers August 30, 2023

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ROUTE An owner who lives out of state contacts a licensee who is in the state where the owner's property is located. The owner hires the licensee to sell the property for $150,000. The licensee realizes that the land is in an area that has recently been rezoned for a higher use. He tells the owner he will purchase the property himself. He does so
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e a Test https:/www.mathod FIN 343: Advanced Corporate Finance Spring 2018 Test: Test 2 (Chapters 14-16) Test.aspx?testid-176801451& centerwin yes kassandra romero 3/25/18 1 1:02 PM Time Remaining: 00:56:22 Submit Test This Question: 1 pt 14 of 40 (19 complete) This Test: 40 pts possible In its IPO, Jilian's Imprints, a small publishing house,
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What is the value of a call option if the underlying stock price is $52, the strike price is $45, the underlying stock volatility is 44 percent, and the risk-free rate is 5.3 percent? Assume the option has 138 days to expiration. (Round your answer to 2 decimal places. Omlt the "$" sign in your response.) Call option
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Ocean Power Technologies has $300 million of common equity, with 12.2 million shares of common stock outstanding. If their Market Value Added (MVA) is $176 million, what is the company's stock price? Your answer should be between 27.52 and 50.98, rounded to 2 decimal places, with no special characters. 5 pts Question 13 Houston Pumps recently
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(c) With the cash from the redeemable preference share issue, Afia Akorama plc goes on to purchase (and later sell) two further financial assets: 1. An interest rate swap for GHe200,000, which was sold one month later for GHe225,000. A member of treasury staff has told you 'we bought it as we had a tip that we could make a quick profit on swaps in
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RA A corporation issues $93,000, 8%, 5-year bonds on January 1, for $97,190. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight-line method of amortization of bond premium, determine the amount of bond interest expense to be recognized on July 1. Select the correct answer. O $1,720 51.139 O 57.440 $3.301
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Grupo Bimbo (Mexico). Grupo Bimbo, headquartered in Mexico City, is one of the largest bakery companies in the world. On January 1st, when the spot exchange rate isPs 10.80/$, the company borrows $25.0 million from a New York bank for one year at 6.80% interest (Mexican banks had quoted 9.60% for an equivalent loan in pesos). During that year,
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Which is false? Compared to commercial banks, finance companies: A. do not take deposits. B. have more regulations. C. rely more on commercial paper for funding. D. are smaller.

When a securities firm acts as a ...... it maintains a position in securities. a. adviser b. dealer c. broker d. none of the above

Hockey Time!, Inc. has sales of $623,000, costs of $317,225, depreciation of $29,450, interest expense of 23,480 and a tax rate of 35%. If the firm paid out $92,000 in dividends, what is the addition to retained earnings?

The _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ breaks down return on equity into three component parts: operating efficiency of the firm, its asset use efficiency, and financial leverage.

Lets go back to the Double-R Nutting Company. Suppose that Double-Rs bonds have a face value of $64. Its current market-value balance sheet is: Book-Value Balance Sheet Assets Liabilities and Equity Net working capital $ 90 Bonds outstanding $ 95 Fixed assets 80 Common stock 75 Total assets $ 170 Total liabilities and shareholders equity $ 170 Who

The risk that that banks management team will make bad business decisions is called: 1) operational risk 2) liquidity risk 3) interest rate risk 4) credit (default) risk 5) strategic risk

what are the differencea between financing a house versus financing a car?

# please help me with this question in detail, in an organized way . And please do not simply copy other's solution# Let S(t) be the price of dollar at time t, i.e. the number of euros per dollar. The behavior of S(t) through time is modeled by () () = + () for a standard Brownian motion and real value and > 0. Now, let () = 1 () be the exchange

Explain why some companies can influence many of their ratios simply by choosing their fiscal year-end. In what type of industries do you think this might be a particular problem ?

You are in the market to purchase a new automobile. Marginal Deal, Inc. will give you a deal of $500 off the list price on a $10,000 Porsche. Consider the following historical events relating to your automobile purchase. Marginal Deal, Inc., in turn, makes a new offer. You pay $10,000, but you can borrow the sum from the dealer at 0.5 percent per

PROJECT CASH FLOW Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenues $10 million Operating costs (excluding depreciation) 7 million Depreciation 2 million Interest expense 2 million The company has a 40%

Taufel, Inc. is considering implementing a cost-cutting project. The pre-tax cost reduction is expected to be $18,000 for each of the three years of the project's life. The project has an initial cost of $40,000 and belongs in a 20% CCA class. The company has a tax rate of 32% and the discount rate for the project is 9%. The project can be sold to

Two competing commercial banks situated in the same region have comparable asset portfolios, but one operates with a total capital ratio of 10%, while the other operates with a ratio of 12%. Compare the opportunities and risk profiles of the two banks. (10 marks)

A bond pays annual interest payments of $50, has a par value of $1,000, and a market price of $1,200. WHAT is the coupon rate

Suppose that Kittle Co. is a U.S. based MNC that is considering setting up a subsidiary in Singapore. Kittle would like this subsidiary to produce and sell guitars locally in Singapore, and needs assistance with capital budgeting. The duration of this project is four years, with an initial investment of S$10,000,000 (Singapore dollars). The

Kevin and Claire have a house on several wooded acres. They heat their home largely by burning firewood that is delivered to them by the cord (a large quantity of wood). Kevin feels that if they owned a wood splitter, he could cut up and split their own firewood and save the several hundred dollars per year they now spend on firewood. The cost of
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11. Name 3 uses of Eree Cash Flow? Opts ach) 12. Assume Target Stores has $1,3 12,500 in current assets and $525,000 in current labili notes payable and use them to increase inventory, How muc ties. Its initial inventory level is $375,000, and it will raise funds as additiona hort-term debt 0? (S pts) h can its s (notes payable) increase without
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Given the following returns, what is the geometric mean? Answer as a percentage to two decimal places. 12%,14%,7%,1%,5%, and 7% Given the following returns, what is the geometric mean? Answer as a percentage to two decimal places. 12%,14%,7%,1%,5%, and 7%
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A project has an initial investment of $150,000. Its four year cash inflows are estimated to be $50,000 in year 1, $80,000 in years 2 and 3, and $50,000 in year 4. If the rate of return is 12%, calculate the project's Profitability Index. 1.51 1.31 1.71 1.41 1.61
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Consider the following table for the total annual returns for a given period of time. Series Average return Standard Deviation Large-company stocks 11.7 % 20.6 % Small-company stocks 16.4 33.0 Long-term corporate bonds 5.6 9.1 Long-term government bonds 6.1 9.4 Intermediate-term government bonds 5.6 5.7 U.S. Treasury bills 3.8 3.1 Inflation 3.1

Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. Suppose also that the expected return required by the market for a portfolio with a beta of 1.0 is 6.0%. According to the capital asset pricing model: Required: a. What is the expected return on the market portfolio? (Round your answer to 1 decimal
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An investor is considering purchasing an office building for $5 million with the intention of renting it out. Six months after purchase the investor will spend $0.5 million on necessary refurbishments and improvements. A tenant has agreed to lease the building in one year's time for 20 years. The tenant will pay an initial rent of $0.75 million

QUESTION 6 (20 MARKS) Percentage changes; ple ratios and investors' expectations Shown below are Gamma, Inc.'s earnings per share for a four-year period, along with the per-share market price of the company's stock at each year-end. The earnings in 2015 were the highest in the company's history. 2015 2014 2013 2012 Earnings per share s9 S7 $6 $7
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(Question 3)(Required)(Margin Account) You have $3,000 to invest. You lose -20% (-$600 loss) when stock market goes down -4%. What is the Margin rate in this market
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Sensotech, Inc., a maker of microelectromechanical systems, believes it can reduce product recalls by 10% if it purchases new software for detecting faulty parts. The cost of the new software is $225,000. Identify the symbols involved and the values for the symbols that are given in determining how much the company would have to save each year to

Your firm is contemplating the purchase of a new $500,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $44,000 at the end of that time. You will be able to reduce working capital by $69,000 (this is a one-time reduction). The tax rate is 23 percent and the

Crystal just purchased a house for $1,750,000. Her down payment is $500,000 and the remaining amount will be financed using a 20-year mortgage. The interest rate on this mortgage is 3.7% compounded semi-annually and Crystal will make monthly mortgage payments. How much will the monthly payments be? A) $6,373.56 B) $7,360.33 C) $9,124.36 D)

You are trying to evaluate two independent projects. Both projects have the same initial outlay. Project Adam has an NPV of $4,392.15, an IRR of 11.33%, and an EAA of $1,158.64. Project Eve has an NPV of $5,833.73, an IRR of 9.88%, and an EAA of $1,093.50. The cost of capital for both projects is 9%, the projects have different lives, and the

Assume the betas for securities A, B, and C are as shown here. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Security Beta A 1.41 B 0.78 C 0.86 If you have a portfolio with $20,000 invested in each of Investment A, B, and C, what is your portfolio beta? The beta of

3 . If the liquidity preference theory is correct and you believe that the liquidity premium is 2 . 0 percent, what is the market expectation of the price that bond # 4 will sell for next year?

38. You long one S&P index future contract (the multiplier is $250 for one contract). Assume the initial margin requirement is 8%%. If the maintenance margin requirement is 5%, will you receive a margin call on day 3? How much fund you need to put in this account to keep it working if you receive the margin call? Finish the following marking to
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can I get help on these please 1a) This big company is looking at expanding their building and adding some cablesa nd automation. The system is expected to cost $24,000,000. The company doesn't know what the projected sales will be so they develop a 3 point estimate for annual benefit per the table below. If the company expects this project
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13. Which of the following is a predatory lending practice? a. A loan agreement includes confusing information that does not clearly disclose the borrowers obligations. b. A lender stipulates that a loan will be provided only if the borrower purchases life insurance on the loan. c. A lender provides a home equity line of credit with the

Assume you have received a settlement in the amount of J$1,000,000.00. You now have the option of investing in stocks with the short-term goal of maximizing your funds to pay for your next term college fee, while retaining your principal amount. You decide to invest in the Jamaican Stock Market because you have been told that it is one of the best

a. What is an estimate of Crowth Company's cost of equily? b. Growth Compary also has greferred stock outstanding that pays a $190 por share food dividend it this wock is currently geciced at 52820 , what is Geowth Companys cost of preferred abek? of debt? of 520.1 milion if Growh Companys commen and peoferied shares are preed os in parts (a) and
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Suppose that Ally Financial Inc. issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. a. What was the price of this bond when it was issued? b. Assuming the yield to maturity remains constant, what is the price of the bond

A firm has a total assets of 3000000 and stockholders equity is 1000000. What is the debt to total asset ratio

LTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the n. 1) The security market line is defined as a positively sloped straight line that displays the relationship the ADexpected return and beta of either a security or a portfolio. B) beta and standard deviation of a portfolio. C) nominal and real rates of
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We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year 1 2 Unit Sales 99,000 111,000 134,000 140,000 93,000 3 4 5 The new system will be priced to sell at $455 each. The cockroach eradicator project will require $1,800,000 in net working capital to start, and total net working capital will
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A 5-year, $1,000 par value zero-coupon rate bond is to be issued to yield 8 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What should be the initial price of the bond? (Assume annual compounding. Do not round intermediate calculations and round your answer

Hyperion Inc., currently sells its latest high-speed colour printer, the Hyper 500, for $334. Its cost of goods sold for the Hyper 500 is $191 per unit, and this year's sales (at the current price of $334) are expected to be 21,000 units. Hyperion plans to lower the price of the Hyper 500 to $286 one year from now a. Suppose Hyperion considers
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All Ltd is considering a project, which will involve the following cash inflows and (out) flows: Initial Outlay 5540 After 1 Year 1144.3 After 2 Years 1135.3 After 3 Years 1171 What will be the NPV (net present value) of this project if a discount rate of 0.1 is used
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The nonlinear system ( 13 x +4x3 11 + x3 = x 22+x; G(x,x2,3)= 15 10 25 G a) Show that has unique fixed point in D ={(x1,x2x3) | 0 5x7,x2,43 51.5} b) Apply functional to approximate 2-iteration of the solution. c) Find the error bound
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QUESTION 14 An investor bought three call options on crude oil futures with the strike of S contracts traded at $40.83 at option's expiration, the investor would receive A nothing. B. a long position in three crude oil futures and $2.490 in cash. c S122.490 in cash. OD. a short position in three crude oil futures and $2,490 in cash E. S120,000 in
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50 years ago your parents purchased a non-dividend paying share in Pinder Ltd for $0.12. Today that share is worth $12.60. Which of the following is closest to the average annual geometric rate of return that your parents have earned on the share? 8.53% 9.08% 5.20% 9.75%
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Question 10 1 pts Advantages of the payback period include that it is easy to calculate, easy to understand, and that it is based on cash flows rather than on accounting profits. True False
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Impact of Asset Light business models on balance sheet: Capitalization and Working Capital.

Q20. What change is made in coverage by changing the HO-3 to an HO-5 policy? O Open perils coverage is added for the personal property. O Replacement cost coverage is added for personal property. O Open perils coverage is added for the dwelling. Replacement cost coverage is added for the dwelling. Q20. What change is made in coverage by changing
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1.1 Background In its response to the Commissions initial inquiries, NAB acknowledged that between 2013 and 2016, NAB bankers in the Greater Western Sydney area and in other parts of NSW, the ACT and Victoria, engaged in misconduct in connection with home loan applications submitted through the NAB Introducer Program. Anthony Waldron, the

A universal life insurance policy is a type of cash-value insurance combining term insurance with a tax-deferred savings feature in a package in which both the premiums and the benefits are flexible. True False
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solve A, B , & C please D. wvnat is tre geometnc average return over the 10-year period? c. If you invested $100 at the beginning, how much would you have at the end
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21 File Home Insert Draw Page Layout Stock Template1-Excel Formulas Data Review From Text/CsV LO Recent Sources View Help Tell me what you wamt to do Quenes 8& Connections From Web Existing Connections Clear et Properties From Table/Range Refresh g Reapply ta Edit Links Filter Advanced All Ted to Get & Transform Data Columns Queries & Connections
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A 3 year-old a computer-controlled fabric cutting machine, which had a $25,000 purchasing price, has a current market (trade-in) value of $10,000 and expected O&M costs of $4,000, increasing by 1,000 per year. The machine is required to have an immediate repair that costs $2,000. The estimated market values are expected to decline by 20% annually
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Theo wil deposit $3,500 in an account one year from todoy, an additional $6,500 two years from today, and $9.000 three years from todoy. If the account esms 7.35 percent per year, compounded annually, what will his account balance be 14 years from today? Mutple cheice 122.382 516.176 551284 \$4) 515.75 H
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34. Valuing a business Construct a new version or Table 4.8, assuming that the concatenator division grows at 20% 12%, and 6%, instead of 12%,9%, and 6%. You will get negative early free cash flows. a. Recalculate the PV of free cash flow. What does your revised PV say about the division's PVGO? b. Suppose the division is the public corporation
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question 32 QUESTION 31 Which of the following financial ratios would you use to measure time profitability Profit Margin Equity Multiplier Time Interest Earned ratio O Quick Ratio 190 QUESTION 32 Say a firm will only francets growth using internal financing and through wing only an amount of dat we de tout to constart the temos a ROE of 15% and a
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Your grandmother just died and education, and you must withdr the beginning of each of the next 3 years and end up with zero in the account? left you $132 o in a trust fund that pays 65% interest. You must spend the money on your college aw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at o a.
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briefly discuss the general trend of commercial bank regulation in the U.S. and its impact on the economy in the last decade.

10. Your father has $500,000 invested at 8%, and he now wants to retire. He wants to withdraw $50,000 at the end of each year. How many years will it take to exhaust his funds (run the account down to zero)? N I/Y PV PMT FV

Hamad and Mahmoud as an investor and financial analyst respectively revolve around the best indicators that can be relied upon in the decisions of Mr. Hamad about the best investment opportunities in three Qatari companies. It is required to determine the best indicator and the best company from the following table to rationalize the prospective
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Smallville Bank has the following balance sheet, rates earned on its assets, and rates paid on its liabilities. Rate Earned (%) 0 9 7 11 0 10 Balance Sheet (in thousands) Assets Cash and due from banks $ 6,100 Investment securities 23,000 Repurchase agreements 13,000 Loans less allowance for losses 81,000 Fixed assets 11,000 Other earning assets
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(1 point) In 6 years Harry and Sally would like to have $12,000.00 for a down payment on a house. How much should they deposit each month into an account paying 8% compounded monthly (Note: The answer is a dollar amount, should have a dollar sign, and should be accurate to two decimal places)
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Suppose ABC firm is considering an investment that would extend the life of one of its facilities for 3 years. The project would require upfront costs of $7.07M plus $23.64M investment in equipment. The equipment will be obsolete in (N+2) years and will be depreciated via straight-line over that period (Assume that the equipment can't be sold).

What is the coupon rate of a 10 -year $10,000 bond with semi-annual payments of $300? 1% 10% 6% 3% 1.5%
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A company is considering a new project requiring an upfront fixed-asset investment of$1,000,000 with an economic life of 5 years. Depreciation is taken on a straight-line basis, with no expected salvage value. Net working capital required immediately is expected to be $100,000 and will be recovered in full upon the project's completion. In the

Rossdale, Inc., had additions to retained earnings for the year just ended of $627,000. The firm paid out $120,000 in cash dividends, and it has ending total equity of $7.22 million. Requirement 1: If the company currently has 590,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per
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2 . 5 pts HK Investments has $ 1 0 miltion face valve commerciat paper with a 2 7 0 - day maturity that is selling for $ 9 . 5 5 miltion What is the BeV on the paper? 8 3 7 percerit 4 7 1 petuent 8 . 4 2 petcert 3 2 8 percert 4 5 0 percent
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How leveraged is the firms capital structure? Analyse your answer. **PLEASE ANSWER THIS TO NEXTERA ENERGY

Super Sonics Entertainment is considering buying a machine that costs $710,000. The machine will be depreciated over four years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $230,000. The company can issue bonds at an interest rate of 7 percent. The corporate tax rate is

The relationship of $ 2 5 0 , 7 2 9 to $ 1 2 5 , 8 0 9 , expressed as a ratio, is a . 1 . 0 b . 2 . 0 c . 0 . 5 d . 0 . 7
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Question 33 Which of the following occurs more frequently while trading on the New York Stock Exchange (NYSE)? Circuit Breaker Trading Halt Both A and B occur about the same amount of times a year Neither A or Bever occur I don't have enough information to answer the question as A and B are the same thing. A Moving to another question will save
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Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1 R 1 = 5 percent, E ( 2 r 1 ) = 7 percent, E ( 3 r 1 ) = 7.5 percent E ( 4 r 1 ) = 7.85 percent Using the unbiased expectations theory, calculate the current

For example, assume Oliver wants to earn a return of 10.50% and is offered the opportunity to purchase a $1,000 par value bond that pays a 8.75% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bond's intrinsic value: Intrinsie Value - re ceptet er der tale Complete the
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Suppose the exchange rate was 6 0 . 5 6 3 1 3 1 Indian rupees for each Canadian dollar. What is the price, in Canadian dollars, of a flight to Toronto costing 1 3 5 comma 2 6 8 rupees ? Question content area bottom Part 1 The price is C$ enter your response here. ( Round to the nearest cent as needed. )

A stock inder whict pays no dividends has a spol price of $1,300. You are aa arthitrageur with a consinuously compoanded borrowing rale of 95 and a coatinuously creppounded lending rate of 8.5%. There is a $1,20 traasaction fee (paid at time 0 only), for going either long or short the forward contract. There is also a 54 , 80 fee fer bayiag or
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2x + 7y - z = 0 0 5x - 3y + 5z = 1 7x + 4y + 4z = 1
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5. Printing Instructions: If the solution requires you to use Excel, please submit two copies of your answer sheet, one with the numerical answers and the other with the formulas. To print out a formula view of the Excel sheet, please follow the instructions below: 1. Cllck on Formulos on the Excei Ribbon Click Formulas > Show Formula 3. Cllck
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10. On March 1 the price of a share of IBM stock is $95. Use the Black-Scholes Model to find the price of a call option on IBM stock with an expiration date of August 15, and an exercise price of $91. Assume the continuously compounded risk-free rate is r=6%, and the standard deviation of IBM stock returns is =0.4
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Your company is asking you as a CFO to consider your capital costs for your long term investment projects. As you collect the recent capital information as the follows: 1. Your company issue the common shares of Cnd$100/share, 2 million shares outstanding; Your company Beta is 1.7 and market risk free rate is 2% at this moment, and expected market

Most of these problems do not require any calculations, although you can substitute your own numbers to fit the question. Stock questions use the equation for the Dividend Growth Model P0 = D1/(r g), where P0 is the stocks price, D1 is the next dividend, r is the investors required return, and g is the stocks dividend growth rate. Bond questions

Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.10 ?44% ?13% Mild recession 0.20 ?16% 11% Normal growth 0.30 10% 4% Boom 0.40 30% 3% a. Calculate the values of mean return and variance for the stock fund. (Do not round intermediate calculations. Round "Mean return" value to 1

4.2 Bodgers Ltd, a business that provides a market research service, operates a job costing system. Towards the end of each financial year, the overhead recovery rate (the rate at which indirect cost will be absorbed by jobs) is established for the forthcoming year. (a) Why does the business bother to predetermine the recovery rate in the way
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What formula should I put in each cell and what is answer (g) Ten years ago your parents bought $10,000 worth of Trans-National Systems, Inc. stock. At the end of each year they invested another $2,000. Today the stock is worth $54,000. Give a formula that determines what annual interest rate they made on their money. Initial Cost Annual
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Marginal tax rates Partner A, a single taxpayer, is one of two partners in a small business. As such, she receives pass-through income that is taxed at her personal tax rates. After all adjustments and deductions have been made, including the 20% qualified business income deduction, she is preparing to calculate her taxes owed for the year. Using
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Calculate the final ownership for XYZ if he raises $12 million at $6 million pre-money, as opposed to the following in two-year increments: (a) $2 million at $4 million pre-money

c. What amount would you have if you deposited $1,300 a year for 30 years at 6 percent (compounded annually)? (Round FVA factor to 3 decimal places and final answer to the nearest whole dollar.) Show all work.

Problem 1 Given the following information for Lightning Power Co., find the WACC. Assume the company's tax rate is 35 percent. Debt: 8,000 bonds outstanding, selling for $1,060 and yield to maturity 7% Common Stock: 310,000 shares outstanding, selling for $77 per share the Beta is 1.15. Preferred stock: 15,000 shares of preferred stock
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Consider the "quoted" interest rates on the following 180-day securities Commercial paper 3.52% Certificate of deposit 3.65% Treasury bills 3.10% Compute the yield on the commercial paper on a bond-equivalent basis. 3.5796 3.52% 3.69% 3.639
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35 of 40 (28 complete)D This Test: 40 pts possibl Use the information for the question(s) below Consider two fims, Firm X and Firm Y, that have identical assets that generate identical cash flows. Firm Y is an all-equity firm, with 1 million shares outstanding that trade for a price of $24 per share Firm X has 2 million shares outstanding and $12
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6. Explain why following statement is not correct: "The higher the risk of my portfolio, the higher the expected return I should get. Otherwise nobody will take any risks." Use CAPM formula to help you understand
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the answer is 4280, help me with the equation please, thank you! What is the present value of $629 per year for 11 years discounted back to the present at 9 percent? Note: Round to 2-decimal places
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A 100% domestic U.S. company will have a Neither transaction exposure nor economic exposure Both transaction exposure and economic exposure Transaction exposure but no economic exposure No transaction exposure but could have economic exposure
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A project currently generates sales of $11 million, variable costs equal 50% of sales, and fixed costs are $2.2 million. The firms tax rate is 30%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, if sales increase from $11 million to $12.1 million? b. What are the effects on cash flow, if variable costs increase

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