• Q : Problem on bond equivalent yield....
    Finance Basics :

    A 20-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of 8%. Find the bond equivalent yield if the bond price is:

  • Q : Problem on stock value per share....
    Finance Basics :

    Smith has no debt or preferred stock, and its WACC is 10%. If Smith has 50 million shares of stock outstanding, what is the stock's value per share?

  • Q : Standard deviation of new combination of services....
    Finance Basics :

    The correlation between these services has been estimated to be +.10 and the bank estimates that 90 percent of its business will be from traditional services and 10 percent from the new underwriting

  • Q : Problem on expected rate of return on stock....
    Finance Basics :

    Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns:

  • Q : Components of credit policy....
    Finance Basics :

    What are the four elements of credit policy? To what extent can the firm set thier own credit policies as to having to accept policies that are dicticted by the competition?

  • Q : Advantages and disadvantages of use of excess cash....
    Finance Basics :

    Another option available to the firm would be to reduce the firm's outstanding debt. What are the advantages and disadvantages of this use of excess cash?  

  • Q : Problem on company cost of equity capital....
    Finance Basics :

    David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity. The yield to maturity on the company's outstanding bonds is 9 percent, and the company's tax rate is 40 pe

  • Q : Problem on required return....
    Finance Basics :

    Assuming annual dividend payments, what is the current market value of a share of IBM stock if the required return on IBM common stock is 12%?

  • Q : Problem on dividend amount....
    Finance Basics :

    A preferred stock sells for $30.65 a share and has a market return of 13.05 percent. What is the dividend amount?

  • Q : Problem on holding-period return....
    Finance Basics :

    Find the holding-period return for a 1-year investment period if the bond is selling at a yield to maturity of 7% by the end of the year.

  • Q : Issue equity or issue debt with an interest rate....
    Finance Basics :

    The company needs a cash infusion of $1.32 million, and it can issue equity or issue debt with an interest rate of 9 percent. Assume there are no corporate taxes.

  • Q : Problem on expected dividend per share....
    Finance Basics :

    Warr Corporation just paid a dividend of $3 a share (i.e., D0 = 3. The dividend is expected to grow 9% a year for the next 3 years and then at 5% a year thereafter. What is the expected dividend per

  • Q : Financial intermediaries relatively....
    Finance Basics :

    Indirect finance is more important than direct finance in most countries in part because of information costs associated with lending. Why are financial intermediaries relatively more effective at r

  • Q : Problem on wacc for general technology....
    Finance Basics :

    General Technology's capital is from the following channels: 30% from debt paying 9% interest rate, and 70% from common equity. The cost of equity is 13%. The marginal tax rate is 40%. What's the WA

  • Q : Determine expenses between fixed and variable cost per unit....
    Finance Basics :

    Separate the expenses between fixed and variable cost per unit. Using this information and the sales price per unit of $6, compute the break-even point.

  • Q : Demerits of leasing rather than owning....
    Finance Basics :

    Discuss the advantages and disadvantages of leasing rather than owning.

  • Q : Disadvantages of a liberal credit policy....
    Finance Basics :

    Comment on the advantages and disadvantages of a liberal credit policy from the perspective of the firm.

  • Q : Purpose of ratio document and concept theme....
    Finance Basics :

    Describe the purpose of the ratio document and the concept theme and idea you have created to open a successful daycare business

  • Q : Determining the forward price of contract....
    Finance Basics :

    You enter into a forward contract to buy a 10-year, zero coupon bond that will be issued in one year. The face value of the bond is $1,000, and the 1-year and 11-year spot interest rates are 6 perc

  • Q : Distinction between business risk and financial risk....
    Finance Basics :

    What's the difference between business risk and financial risk? How can these risks be measured in a total risk sense?

  • Q : Break-even point in units of output for firm....
    Finance Basics :

    You are employed as a financial analyst for a single-product manufacturing firm. Your supervisor has mad the following cost structure information available to you, all of which pertains to an output

  • Q : Problem on annual interest tax shield....
    Finance Basics :

    What is the amount of the annual interest tax shield for a firm with $3 million in debt that pays 12% interest if the firm is in the 35% tax bracket?

  • Q : Problem regarding current stock price....
    Finance Basics :

    Ackert Company's last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm's re

  • Q : Problem on stock dividends....
    Finance Basics :

    The market value balance sheet for Vena Sera Manufacturing is shown here. Vena Sera has declared a 25 percent stock dividend. The stock goes ex-dividend tomorrow (the chronology for a stock dividend

  • Q : Statements about treasury bills yield....
    Finance Basics :

    Which of the following statements is correct when Treasury bills yield 7.5% and the market risk premium is 9.5%?

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