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In the 2016 Presidential election season, Hillary Clinton expressed concern over outsourcing the management of federal and state prisons to private prison management firms, stating in the first debate, “I’m glad that we’re ending private prisons in the federal system. I want to see them ended in the state system.” As Clinton began to take a large lead in the polls, prison management firms CoreCivic (ticker CXW) and GEO Group (ticker GEO) posted substantial declines. Using Yahoo Finance (finance.yahoo.com), find the closing prices for these stocks for each day around the election. On Yahoo, go to the “Historical Data” section on each stock’s page. You will need the Adjusted Closing Prices on 11/7/2016, 11/8/2016, and 11/9/2016.
a. Find each stock’s return on 11/8 and 11/9.
b. Construct a price-weighted index for the two prison stocks and find the return to the index on 11/8 and 11/9.
c. Construct a market-cap weighted index for the two prison stocks and find the return to the index on 11/8 and 11/9. You can assume that the number of shares outstanding (found on the “Statistics” page) has remained constant in the months since the election.
The Charleston Company is a relatively small, privately owned firm. Last year the company had after-tax income of $20,000, and 15,000 shares were outstanding. The owners were trying to determine the market value for the stock, prior to taking the com..
Jiminy's Cricket Farm issued a 30-year, 7.6 percent semi annual bond 6 years ago. The bond currently sells for 92.5 percent of its face value. The book value of this debt issue is $93 million. What is the total market value of debt? What is the after..
Currently, one share of ABC stock is valued at 92. You are given the following prices of European options on one share of this stock: You buy one 95-strike call option. On the expiration date of the option, ABC stock has a price of 101 per share. Fin..
Ideally, which of the following type of assets should be financed with long-term financing?
Brad wants to know the future value at the end of 2 years of a $15,000 deposit made today into an account paying a nominal annual rate of 12%. Find the future rate of Brad’s deposit, assuming that interest is compounded annually. Find the future rate..
ABC company is considering factoring its receivable. The firm has credit sales of $600,000 per month and an average receivable balance of $600,000 with net 90 credit terms. The factor will advance a loan which equals 85% of the receivables factored l..
Washington-Pacific (W-P) invests $5 million to buy a tract of land and plant some young pine trees. The trees can be harvested in 11 years, at which time W-P plans to sell the forest at an expected price of $10 million. What is W-P's expected rate of..
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Assume the returns from holding small-company stocks are normally distributed. Also assume the average annual return for holding the small-company stocks for a period of time was 15.5 percent and the standard deviation of those stocks for the period ..
How do interest rates affect economic growth? Why do interest rates affect some stock prices more than others? Which federal agency influences interest rates?
Multinational Financial Management
Starting today, George is going to contribute $300 on the first of each month to his retirement account. His employer will contribute an additional 50% of the amount George contributes. If both George and his employer continue to do this and he can e..
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