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The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
Bruner aeronautics has a perpetual preferred stock outstanding with a par value of 100. The stock pays a quarterly dividend of 2 and its current price is 80. What is the nominal annual rate of retu
Calculate the expected cash flows, standard deviation, and coefficient of variation for each project.
During the past year, the consumer price indexes (CPI) of the United States and the Eurozone rose by 3 percent and 4 percent, respectively. If PPP holds, what is the percentage change in the value o
Do the Flemings have an adequate emergency fund? If no, how much should they have set aside? Why are they adequately protected or why do they need more set aside
Hedging is often referred to as a means of dealing with risk. Describe some techniques that fall under this concept that could help you deal with an anticipated price increase.
Describe the pros and cons of hedging versus not hedging the risk. Use an example where possible.
What types of risk are measured by standard deviation and beta? Which type of risk is more important? Where does correlation fit in? Assume the market risk premium is 5%. Research a current stock a
Differentiate liquidity management and capital management performed by a corporate treasury. Briefly discuss the business opportunities available to a bank treasury arising from these activities.
Sound cash management techniques would support
If his remaining life expectancy is twelve years, the prime interest rate is 8 percent, and he can ignore taxes, which should he choose? Would your answer be different if the prime interest rate wer
Another $100,000 portfolio currently yields $ 7,000 per year in income, but this amount is expected to grow at 4 percent annually. In about how many years will the two portfolios yield equal amounts
According to liquidity preference, what is the equilibrium interest rate?
Privacy protection has become an important public policy issue in the financial service industry. Why does this issue appear to be more important today than in the past?
Describe how each of the following terms could affect the availability and cost of financial services to the public:
Samuelson Plastics has 7.5 percent preferred stock outstanding. Currently, this stock has a market value per share of $52 and a book value per share of $38. What is the cost of preferred stock?
What is the percent increase for revenues which have grown from $150 (million) last year to $200 (million) this year. Show all steps.
Define an Arrow-Debreu security within a basic state-preference model with N securities and S states of nature. Under what conditions will markets be complete in such a setting?
What is the likely impact of the current Federal Reserve policy on the level of interest rates? Will it increase or decrease interest rates? What impact will this have on the value of existing bonds
A firm wishes to maintain an internal growth rate of 7% and a dividend payout ratio of 25%. The current profit margin is 5%, and the firm uses no external financing sources. What must total asset tu
A person wins $1 million in the state lottery. Actually, the person receives $50,000 per year every September 1st. Using a 10 percent discount rate and the bonds table, construct a cash-matched dedi
As the chair of the personnel committee, you are responsible for determining the initial amount to fund this retirement stipend. If your figures are correct, all succeeding annual budget amounts wil
Investors require a 16 percent return on the stock for the first three years, a 14 percent return for the next three years, and then an 11 percent return thereafter. What is the current share price
What if rates suddenly fall by 2% instead? What does this problem tell you about the interest rate risk of lower-coupon bonds?
The company uses a 10% interest rate on all of its projects. Calculate the MISS of the project using all 3 methods.