Reference no: EM131308133
1. Using only the information below, which company likely can produce products more cheaply than its competitors? Company A has Profit Margin of 9%, Current Assets of $300M, Current Liabilities of $280M, and a Debt/Equity ratio of 2.5 Company B has Profit Margin of 20%, Current Assets of $175M, Current Liabilities of $120M, and a Debt/Equity ratio of 4.0
Company B because it has a higher profit margin
Company A because it has more current assets
Company A because it is more leveraged
Company B because it has a higher current ratio
2. In which scenario should a company be most inclined to issue additional debt?
The company has many investment opportunities, little debt, and an undervalued stock price
The company is illiquid with an overvalued stock price and high leverage
The company’s stock price has just doubled as they completed a 2-1 stock split
Interest rates have tripled in the last 3 months to a 20-year high
|
Which a company can increase its dividend payments
: A firm can only pay out its earnings to investors or reinvest their earnings. Successful young firms often have high initial earnings growth rates. Estimating dividends, especially for the distant future, is difficult. Which of the following is NOT a..
|
|
What is the expected share price as consequence
: Sunnyfax Publishing pays out all its earnings and has a share price of $38. In order to expand, Sunnyfax Publishing decides to cut its dividend from $3.00 to $2.00 per share and reinvest the retained funds. Once the funds are reinvested, they are exp..
|
|
What is the yield to maturity of a ten-year
: What is the yield to maturity of a ten-year, $1000 bond with a 5.2% coupon rate and semiannual coupons if this bond is currently trading for a price of $884? Examples of cash disbursements include all the following except:
|
|
Usually the face value of a bond is repaid at maturity
: Which of the following risk-free, zero-coupon bonds could be bought for the lowest price? The bond certificate typically specifies that the coupons will be paid periodically until the maturity date of the bond. Usually the face value of a bond is rep..
|
|
Most inclined to issue additional debt
: In which scenario should a company be most inclined to issue additional debt? Using only the information below, which company likely can produce products more cheaply than its competitors? Company A has Profit Margin of 9%, Current Assets of $300M, C..
|
|
How much money did it cost to buy these shares
: You would like to buy shares of Sirius Satellite Radio (SIRI). The current ask and bid quotes are $4.14 and $4.11, respectively. You place a market buy order for 580 shares that executes at these quoted prices. How much money did it cost to buy these..
|
|
Reason net income can differ from cash flows
: Which of the following is a reason net income can differ from cash flows? Which of these is a disadvantage of using the payback period as a capital budgeting tool?
|
|
Find total annual cost of paper for webster at optimal level
: The Webster Times buys 10,000 tons of newsprint annually with the following pricing structure: 1 to 99 tons $100 a ton, 100 to 300 tons $95 a ton, over 300 tons $90 a ton. The cost of capital to Webster is 14%. Find The optimal amount of newsprint th..
|
|
Discuss how bond options can be used for hedging strategies
: Provide three examples of financial futures and describe how investors would use these contracts. Discuss how bond options can be used for hedging strategies.
|