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Which of the following features would increase the value of a corporate bond? Which would reduce its value?
Arbitrage and Exchange Gain or Loss. You own $10,000. The dollar rate on the Swiss franc is 1.380 SFs. Based on the table above, are arbitrage profits possible? What is the gain (loss) in dollars?
Suppose you are valuing a future stream of high-risk (high-beta) cash outflows. High risk means a high discount rate. But the higher the discount rate, the less the present value. This seems to say
Estimate the opportunity cost of capital and the project"s PV (using the same rate to discount each cash flow). What are the certainty-equivalent cash flows in each year?
If the required return is 10% and Robb Computer applies the present value index decision rule, which project should the firm accept?
KTI's return on new investments is 15% and their equity cost of capital is 12%. What is the value of a share of KTI's stock?
After t = 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stock's expected constant growth rate after t = 4, i.e., what is X?
What is the forgone lost future value of her $15,000 over the 40 years at 6 percent? (b) What would be the forgone lost future value of $60,000 over 40 years if Delores had to pay allthe costs for
What are the four chief categories of real options?
Herbal Resources is a small but profitable producer of dietary supplements for pets. This is not a high-tech business, but Herbal"s earnings have averaged around $1.2 million after tax, largely on t
The Treasury bill rate is 4 percent, and the market risk premium is expected to be 10 percent. What is Nodebt's asset beta? What is Nodebt's weighted-average cost of capital?
The internal rate of return is 20 percent. The NPV, assuming a 20 percent opportunity cost of capital, is exactly zero. Calculate the expected economic income and economic depreciation in each year.
The Modern Language Division earned $1.6 million on net assets of $20 million. The cost of capital is 11.5 percent. Calculate the net percentage return on investment and EVA.
Suppose the euro is quoted at 0.7064-80 in London and the pound sterling is quoted at 1.6244-59 in Frankfurt. Compute the percetage bid-ask spreads on the pound and euro.
How does the payment of dividends on preferred stock affect the EPS computation?
In the 1st quarter of 2001 Merck paid a regular quarterly dividend of $.34 a share.
What effective interest rate per month, compounded continuously, would be required for a single deposit to triple in value in 5 years?
Two acceptable accounting methods for reporting purposes. How each of the two acceptable accounting methods identified affect current period income.
Describe the accounting treatment for discontinued operations. How should an analyst treat discontinued operations?
What conditions are necessary for an item to qualify as a prior period adjustment?
What does it mean when it is said the U.S. is running a trade deficit? What impact do you think a trade deficit could have on interest rates?
Evaluate a project that costs $200,000 is expeced to last for10 years and produce after-tax cash flows including depreciaton of$44,503 per year.
Which of the following items are classified as assets on a typical balance sheet?
Their yeild to maturity is 9% based on semiannual compunding and the current market price is $853.61. The bonds have apar value of $1000. What is the bonds annual coupon interest rate?