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Would you expect that a technology firm or a utility firm would have a higher Price/Earnings ratio?
A hedge fund is long $315 million in certain stocks and short $225 million in other stocks. The hedge fund's equity is $185 million. The fund's overall beta is 0.75. Calculate the gross and net leve
Your firm hired Vikram Mehra as an active manager for its pension fund. His benchmark is the Russell 2000 growth index. Which of the following statistics are most suitable to evaluating Vikram's per
There are 100,000 shares of stock outstanding which trade at their book value of $30. Compute BWP's contribution, contribution margin, EAT, DOL and EPS.
The Clayton Corporation has warrants outstanding that permits the holder to purchase one share of common stock per warrant at $30.
Use the information from the previous two problems. Calculate BWP's breakeven point in units and dollars, with and without the purchase of the new machine.
If you take out an $8,000 car loan that calls for 48 monthly pauments at an APR of 10%, what is your monthly payment? What is the effective annual interest rate on the loan?
Identify the risks in a convertible arbitrage strategy that takes long positions in convertible bonds hedged with short positions in Treasuries and the underlying stock.
Suppose the payoff from a merger arbitrage operation is $5 million if successful, -$20 million if not. The probability of success is 83%. The expected payoff on the operation is
For a portfolio of illiquid assets, hedge fund managers often have considerable discretion in portfolio valuation at the end of each month and may have incentives to smooth returns by marking values
A local bank will pay you $100 a year for your lifetime if you deposit $2,500 in the bank today. If you plan to live forever, what interest rate is the bank paying?
What is the duration of the bank's commercial loan portfolio? What will happen to the value of its portfolio if the general level of interest rates increases from 8% to 8.5%?
If you were a major shareholder of a corporation, what kind of people would you seek-in terms of both experience and personal characteristics-to sit on your board of directors? Why?
Assuming all market interest rates are 12%, what is the duration of this bond?
what is capital rationing and how does it affect your cost of capital and your capital budgeting decisions?
Your've borrowed $4,248.68 and agreed to pay back the loan with monthly payments of $200. If the interest rate is 12% stated as an APR, What is the effetive annual rate on the loan?
Bank A pays 7.5% interest, compounded annually, on deposits, while Bank B pays 7%, compounded daily. Based on the EAR (or EFF%), which bank should you use and why?
How much would he have monthly, if he bought a 30 year annuity whose payments start next month? Assume the interest rate is 6 percent per year?
Is a Treasury Bond issued 29 years ago with 6 months remaining before it matures a money market instrument?
What was the purpose motivating regulators to impose interest ceilings on bank savings accounts? What effect did this eventually have on the money markets?
What is the present value of a security that will pay $17,000 in 18 years if securities of equal risk pay 8% annually?
If there is a decline in interest rates, which would you rather be holding, long-term bonds or short-term bonds? Why? Which type of bond has the greater interest-rate risk?
Write down the formula that is used to calculate the yield to maturity on a 20-year 10% coupon bond with $1,000 face value that sells for $2,000. Assume yearly coupons.
Based on the data contained in Table A, what is the brek even point in units produced and sold? Average selling price per unit $15.00.
Consider a bond with a 7% annual coupon and a face value of $1,000. Complete the following table. What relationships do you observe between maturity and discount rate and the current price?