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1. Filer Manufacturing has 8800000 shares of common stock outstanding. The current share price is $71.53, and the book value per share is $6.72. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $48000000, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $73000000, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par.
2. The most recent dividend was $0.99 and the dividend growth rate is 0.06. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 0.28.
What is Filer's WACC? Enter the answer with 4 decimals (e.g. 0.2345)
3. You buy a share of stock, write a 1-year call option with X = $60, and buy a 1-year put option with X = $60. Your net outlay to establish the entire portfolio is $58.5. The stock pays no dividends.
What is the risk-free interest rate? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$"sign in your response.)
Risk-free rate %
Based on the spot-future b estimate (shown below), calculate the number of e-mini S&P 500 futures contracts you need to hedge your portfolio.
How to create a butterfly spread?If, at expiration, the price of a share of IBM stock is $102, what would be your profit?
That is, is he compensated in a way so that he will always be thinking about adding value to the company when making decisions?
Inc. is planning to issue two types of 25-year, non-callable bonds to raise a total of $6 million, $3 million from each type of bond. First, 3,000 bonds with a 10% semi-annual coupon will be sold at their $1,000 par value to raise $3,000,000. The OID..
Find the price of the put option using the simulated stock prices.
Assume that a large managed care company has a low return on equity (ROE).
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon r..
The projected bond yield is 8%. If the par value is ?$1,000?, what is the? bond's price using a semiannual convention if
McGaha Enterprises expects earnings and dividends to grow at a rate of 25% for the next 4 years, after the growth rate in earnings and dividends will fall to zero, i.e., g = 0. The company's last dividend, D0, was $1.25, its beta is 1.20, the market ..
Titan Mining Corporation has 9.6 million shares of common stock outstanding and 400,000 6 percent semiannual bonds outstanding, par value $1,000 each. What is the firm's market value capital structure? If Titan Mining is evaluating a new investment p..
The chart below shows several strike prices for puts on the corn futures contract for March 2018 delivery.
A 35-year maturity financial security is expected to have a cash flow of $230 one year form today. The cash flow is expected to grow at a constant rate of 12% per year for its life. The required rate of return on asset is 14%. What is the maximum pri..
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