Solved: You have run a series of regressions of firm value changes, Finance Basics

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You have run a series of regressions of firm value changes

Question: You have run a series of regressions of firm value changes at Motorola, the semiconductor company, against changes in a number of macro-economic variables. The results are summarized below -

Change in Firm Value = 0.05 - 3.87 (Change in Long Term Interest Rate)

Change in Firm Value = 0.02 + 5.76 (Change in Real GNP)

Change in Firm Value = 0.04 - 2.59 (Inflation Rate)

Change in Firm Value = 0.05 - 3.40 ($/DM)

a. Based upon these regressions, how would you design Motorola's financing?

b. Motorola, like all semiconductor companies, is sensitive to the health of high technology companies. Is there any special feature you can add to the debt to reflect this dependence?

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Finance Basics: You have run a series of regressions of firm value changes

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