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After getting acquaint with the financial markets products and services, Celestila Moonn, an Global Affairs major student, decided to invest in mutual funds and hedge funds; however, she sent an e-mail to an advisor in order to find out how hedge funds differ from mutual funds. Advisor tells the following about both products: "Hedge funds are investment pools that invest funds for (wealthy) individuals and other investors (e.g., commercial banks). They are similar to mutual funds in that they are pooled investment vehicles that accept investors’ money and generally invest it on a collective basis. Hedge funds, however, are not subject to the numerous regulations that apply to mutual funds for the protection of individuals, such as regulations requiring a certain degree of liquidity, regulations requiring that mutual fund shares be redeemable at any time, regulations protecting against conflicts of interest, regulations to ensure fairness in the pricing of funds shares, disclosure regulations, and regulations limiting the use of leverage. Unlike mutual funds, the average performance fee on hedge funds is lower than the average mutual funds." Briefly discuss should Moonn make her investment decision based on her advisor’s above clarifications.
Assume that the real risk free rate is 2% and that the maturity risk is zero. If a 1-year Treasury bond yield is 5% and a 2-year Treasury bond yield is 5% and a 2-year Treasury bond yields 7%, what is the 1-year interest rate that is expected for yea..
in this weekrsquos reading nbspand learning activities you learned aboutthe increasingly competitive global economy.why
Your firm has an average collection period of 36 days. Current practice is to factor all receivables immediately at a discount of 1.7 percent. What is the effective cost of borrowing in this case?
The coupon rate on an issue of debt is 8%. The yield to maturity on this issue is 10%. The corporate tax rate is 31%. What would be the approximate after-tax cost of debt for a new issue of bonds?
What is the current price for Berkshire Hathaway stock, class A. What kind of signal do you think it sends? Has the class A stock has ever had a stock split?
Your firm is contemplating the purchase of a new $585,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $61,000 at the end of that time.
Consider a project with the following data: accounting break-even quantity = 7,440 units; cash break-even quantity = 6,800 units; life = five years; fixed costs = $170,000; variable costs = $40 per unit; required return = 12 percent. Ignoring the eff..
If the cost of equity is 14.8% and a pre-tax cost of debt is 7.5%. The debt-equity ratio is .40 and the tax rate is .34. What is the unlevered cost of capital?
Hope Corporation bonds bearing a coupon rate of 12%, pay coupons semi-annually, have 3 years remaining to maturity, and are currently priced at $940 per bond. What is the yield to maturity? George, Inc. bonds have a face value of $1,000 and a 9% coup..
Many states prohibited bank branching because of all of the following except:
Calculate the cost of capital for each level of debt and equity indicated and what typically happens to the cost of capital? Why?
A factory costs $498,400. You forecast that it will produce cash inflows of $200,074 in year 1, $155,000 in year 2, and $340,000 in year 3. The discount rate is 10.50%. Calculate the PV of cash inflows. Should the company invest in the factor?
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