Reference no: EM131444305
1. Describe how tax changes and regulation changes can be a driving force to innovation in the investment process.
2. The possibility of agency problem are indicative of the relationship between the managers of a firm and those who invest in the firm. What is the mechanisms by which these problems are minimized?
3. A T-Bill with 124 days to maturity has a face value of $100,000, and a discount yield of 3.48%. Calculate the price , bond equivalent yield and the effective yield for the investor.
4. What are two major characteristics of common stock that make it an interesting investment?
5. Describe the difference between a put and call option. What is the key factor in the profitability of an option that makes them so appealing?
6. Describe a negotiated underwriting and give at least one reason it might be preferable to a competitive bid underwriting for the issuer of a security.
7. You have entered an order to sell short 500 shares of broadcast.com at $60 per share. The high of the day was 60. Are you assured of your order being executed? If the initial margin is 50% and the maintenance level is 35%, then at what price above which you will get a margin call?
8. What is the Fisher equation and why is it so important in finance?
9. What is the difference between a risk seeking individual and a risk adverse individual, in term of the approach portfolio management?
10. Why is the covariance of the return important in the formation of portfolios?
11. Calculate the value (price) of a bond that pay semiannual coupons, has a coupon rate of 8%, a maturity of three years, and a yield to maturity of 9%.
If the bond yield after one year is 10%, what is the capital gains yield and the current yield of the bond?
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Weighted average cost of capital
: Cruiseliners, Inc. has 230,000 shares of common stock outstanding at a market price of $40 a share. Cruiseliners' just paid an annual dividend in the amount of $1.75 per share. The dividend growth rate is 3 percent. The bonds are selling at 102 perce..
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What is the multifactor productivity
: The ABC Auto Service Center currently employs 5 technicians. With this crew, they can process 100 customers per day. The hourly wage rate for the technicians is $25: the overhead cost is 2 times the labor cost, and materials cost is $5 per customer, ..
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What is the expected value of the investment payoff
: Consider a coupon bond that has a face value of $100 and matures in 5 years. The coupon rate is 6% and coupons are paid annually. The current interest rate that lenders are willing to let the issuer borrow at is 8%. What is the expected value of the ..
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Dupont and net income precious
: DuPONT AND NET INCOME Precious Metal Mining has $7 million in sales, its ROE is 11%, and its total assets turnover is 4x. Common equity on the firm’s balance sheet is 40% of its total assets. What is its net income? Write out your answer completely. ..
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Describe how tax changes and regulation changes
: Describe how tax changes and regulation changes can be a driving force to innovation in the investment process. The possibility of agency problem are indicative of the relationship between the managers of a firm and those who invest in the firm. What..
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Management receive at their periodic meetings
: What is a major, regular source of financial information that the parties responsible for hiring a hospital’s top management receive at their periodic meetings.
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What is the after-tax cost of capital to zephyr for bonds
: (Cost of debt) The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,000 par value bonds at a net price of $965. The coupon interest rate is 12 percent, and the bonds would mature in ..
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What are the pros and cons of reinvesting earnings
: S&P companies are on average today paying out 31% of their earnings in the form of dividends, but that is down from 52% of earnings in some years. What are the pros and cons of reinvesting earnings, as opposed to paying dividends?
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What amount will consolidated net income change
: Power Corporation owns 75 percent of Swift Company’s stock. Swift provides health care services to its employees and those of Power. During 20X2, Power recorded $37,000 as health care expense for medical care given to its employees by Swift. By what ..
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