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T or F - Other things held constant, an increase in the discount rate of a stock will result in an increase in its price.
T or F - Other things held constant, a decrease in the cost of capital will result in an increase in a project's payback period.
T or F - Short-term financing may be riskier than long-term financing since, during periods of tight credit, the firm may not be able to rollover (renew) its debt.
T or F - All other things equal, for a given percentage change in the discount rate on a bond, the price of the bond will change by a greater percentage the shorter its maturity.
T or F - Holders of well-diversified portfolios can ignore systematic risk.
T or F - If the NPV of a project is positive, the IRR of the project is always greater than the discount rate.
What is the probability that Jenkins will incur operating losses? What is the probability that Jenkins will operate above its breakeven point?
You are the portfolio manager for a mutual fund. Your fund has an expected return of 15% with a standard deviation of 24% and the T-bill rate is 3%. Calculate the weight w. What is the standard deviation of the rate of return on the new portfolio?
The data on closing stock prices at the end of the year for all firms listed in S&P 500 is an example of which kind of historical information? The data on daily stock prices of all firms listed in S&P 500 for the last one year is an example of which ..
How will your expected euro amount of receivables from the Japanese transaction be affected (if at all) by the news that occurred this afternoon? Explain.
The US Treasury decides to issue a three-year treasury note to raise $16 billion. If the following bids were received, calculate the offer price (to 4 decimal places) of the US T-note per $100 face value.
Mitsi Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take five rights to buy a new share in the offering at a subscription price of $25. What price should the stock sell for ex-rights? What is the amount..
Steven's Auto Detailers is trying to decide whether to lease or buy some new equipment for polishing vehicles. The equipment costs $22,000, has a 3-year life, and will be worthless after the 3 years. The aftertax discount rate is 6.2 percent. The ann..
Consider the following annual returns of Molson Coors and International Paper: Molson Coors International Paper Year 1 21.3 % 5.5 % Year 2 − 9.4 − 18.5 Year 3 41.5 − 0.3 Year 4 − 8.9 27.6 Year 5 17.2 − 12.1 Compute each stock’s average return, standa..
A project has an initial cost of $70,000 and a four-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is $2,800, $4,300, $4,900, and $4,500 a year fo..
What is the present value of the following annuity? $819 every year at the end of the year for the next 13 years, discounted back to the present at 17.33 percent per year, compounded annually. Round the answer to two decimal places.
An all equity firm generates cash flows (CFFA) of $100 million every year in perpetuity. Based on the risk of the cash flows, a discount rate of 20% is appropriate for the firm. The firm is considering a project that will require an investment of $75..
If D1 = $2.50, g (which is constant) = 7%, and P0 = $45, what is the stock's expected capital gains yield for the coming year?
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