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A young stockbroker was rather overwhelmed by a flood of new clients. Assunta, one of his clients, had purchased XYZ Corp. stock through the broker at a price of $35 per share. The price had gone down to $29 by the time Assunta telephoned the broker. Assunta told the broker that she wanted to sell the stock if it went below $30 and inquired as to the price. The broker did not check the price, but thinking it could not have fallen below the $30 threshold, simply reassured Assunta that it was still "in the low 30s." Marta, Assunta's cousin, also had purchased XYZ stock at $35 per share and made a similar call to the broker and received the same response. Marta, however, coincidentally saw the price on a stock ticker tape when she hung up and realized the broker had made an error. Both Assunta and Marta held the stock and did not sell. Later that same day, the stock price fell an additional $7 per share. Facing sizable losses, both Assunta and Martha decided to sue for fraud when Marta told Assunta of the broker's misstatement. Discuss the probable outcome of the lawsuits.
The real risk-free rate of interest is 3%. Inflation is expected to be 1% this year and 6% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasury s..
You were offered the opportunity to purchase either a simple interest note or a simple discount note with the following terms: $33,353 at 7% for 18 months. Based on the effective interest rate, which would you choose?
Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 40%. What is the firm’s ..
John wants to buy a property for $105,000 and wants an 80% loan. The lender indicates that a fully amortizing loan can be obtained for 30 years at 12% MEY, with loan origination fees (all lender controlled fees) of $3,500. What is the effective inter..
Calculate the formula value of the right for both the rights-on and the ex-rights cases. How much is the market price of the company's stock expected to drop on the ex-rights date, all other things being equal? Why?
What is the difference between a business and a pure charity?
A stock has a required return of 11%; the risk-free rate is 2.5%; and the market risk premium is 6%. What is the stock's beta? If the market risk premium increased to 10%, what would happen to the stock's required rate of return? Assume the risk-free..
You are considering investing in Cho's Chocolate Confectionary (CCC). CCC's stock price last month was 62.81, CCC's stock price this month was 55.93. As well, CCC paid a dividend of 5.02. After the dividend was paid but before the end of the month, C..
Identify and describe the cash-based liquidity measures. How would you interpret the cash burn rate? Discuss the overall trend in firms’ cash holding.
write a draft of no more than 1800 words of the strategic plan for your organization including the
Prepare a term paper on Do dividends grow at the same rate as earnings and is the Gordon Model fact or fiction
Which one of the following will occur when the internal rate of return equals the required return? Explain why?
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