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?Leonardo, a senior executive at the Las Vegas Home? Bank, either offers only? low-risk prime mortgages or a combination of prime and riskier subprime mortgages. If he provides only prime? mortgages, the? bank's profit is ?$320 million with certainty. If he sell both prime and subprime? mortgages, the bank earns ?$1 comma 600 million with a 25 ?% probability or minus ?$640 million with a 75 ?% ?probability, because subprime loans carry a high risk of default. ?Before, Leonardo received 1 ?% of the? bank's profit if it was positive and nothing? (but got to keep his? job) if it was negative. Under his new? contract, Leonardo receives a salary of ?$2.4 million a year and 0.25 ?% of the? bank's profit. If the bank suffers a? loss, Leonardo is? fired, so that he loses his salary and receives no bonus. Assume Leonardo is risk neutral. Show that? shareholders' expected earnings are higher with the new compensation scheme than with the original one. With the original compensation? scheme, shareholders' expected earnings? (the bank's profit before paying? Leonardo's salary) are ?$___________million. ?(Enter your response as a whole number and include a minus sign if? necessary.) With the new compensation? scheme, shareholders' expected earnings? (the bank's profit before paying? Leonardo's salary) are ?$_______ million. ?(Enter your response as a whole number and include a minus sign if? necessary.)
If half the interest earned on the savings portion of an insurance policy were taxable,
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The returm an investor earns in a bond over a period of time is known as the bolding period return, definednas interest income plus or minus the change in the bonds price, all diveded by the beginning bond price a) what is the holding period return o..
Tubby Toys estimates that its new line of rubber ducks will generate sales of $6.10 million, what is the firm’s operating cash flow?
Jackson corporation's bonds have 12 years remaining to maturity. interest is paid annually, the bonds have a $1000 per value, and the coupon interest is 8%. the bonds have a yield to maturity of 9%. what is the current market price of these bonds?
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A company is considering entering into a joint venture that will require an investment of $10 million. The project is expected to generate cash flows of $4 million, $3 million, and $4 million in each of the next three years, respectively. Assuming a ..
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