About to exercise million dollars in options and then retire

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Reference no: EM131992972

1. Is it better for a firm's actual stock price in the market to be under, over, or equal to its intrinsic value? Would your answer be the same from the standpoint of stockholders in general and a CEO who is about to exercise a million dollars in options and then retire? Explain.

2. Boles Corporation needs to raise $500,000 for one year to supply capital to a new store. Boles buys from its suppliers on terms of 3/10, net 90, and it currently pays on Day 10 and takes discount; but it could forgo discount, pay on Day 90, and get the needed $500,000 in the form costly trade credit. Alternatively, Boles could borrow from its bank on a 12 percent discount interest rate basis. What is the EAR of the lower-cost source?

Reference no: EM131992972

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