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How would you explain the fact that the underwriting spread on IPOs averages about 7 percent of the offering price, whereas the underwriting spread on a seasoned offering of common stock averages le
What are American Depositary Receipts (ADRs), and why have they proven so popular with U.S. investors?
List and briefly describe the key services investment banks provide to firms issuing securities before, during, and after the offering.
What do you think are the most important costs and benefits of becoming a publicly traded firm? If you were asked to advise an entrepreneur whether to take his or her firm public,
Distinguish between a Eurobond, a foreign bond, and a Yankee bond. Which of these three represents the greatest volume of security issuance?
What are the general trends regarding public security issuance by U.S. corporations? Specifically, which security type is most often sold to the public? What is the split between initial and seasone
Differentiate between a U.S. commercial bank and the merchant banks found in other developed countries. How have these differences affected the securities markets in the United States versus those i
Discuss the U.S. banking system regulations that have had a major impact on the development of the U.S. financial system. In what ways has the U.S. system been affected (positively and negatively) b
How does the role that financial intermediaries play in U.S. corporate finance compare to the role of non-U.S. financial intermediaries?
What is the dominant source of capital funding in the United States? Given this result and the fact that most corporations are net dis-savers, what decisions must most managers face in order to add
What is your estimate of the enterprise value of Carswell? What is the value of the equity of Carswell if the acquisition goes through and Smidgeon borrows $2.4 million and finances the remainder us
If the market is weak form efficient then can you make profit by analyzing financial statements on a consistent basis? Explain
Samsun Company is planning to invest in a new project. The cost of the project will be $30 million and is expected to generate cash flows of $12,200,000, $22,326,000, and $9,084,240 over the next th
The project is expected to generate $12,250,000, $20,064,000, and $24,000,000 over the next three years. If the appropriate discount rate is 12 percent, what is the NPV of the project. Round to the
Li Retailing reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Exp
Assume that interest is paid and compounded annually. If an investor purchased a $1,000 denomination bond for $1,025 on July 15, 2010, determine the bond's yield to maturity. Explain why an investor
Using the expectations theory, what is the yield on a 1-year bond, one year from now? Round your answer to two decimal places. What is the expected inflation rate in Year 1? Round your answer to two d
The software license costs $1,000 per month. The rent for the building is $4,000 per month. JW's computer system is always on, so running the new software will not change the current monthly electri
Which of the following methods of evaluating investment projects can properly evaluate projects of unequal lives?
Under what circumstances would it be appropriate for a firm to use different costs of capital for its different operating divisions? If the overall firm WACC were used as the hurdle rate for all di
How do you determine the appropriate cost of debt for a company? Does it make a difference if the company's debt is privately placed as opposed to being publicly traded?
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:
M & P has paid annual dividends of $1.05, $1.20, $1.25, $1.15, and $0.95 over the past five years, respectively. What is the average dividend growth rate?
The variable materials cost is $1.69 per unit, and the variable labor cost is $3.04 per unit. Suppose the firm incurs fixed costs of $750,000 during a year in which total production is 450,000 units