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Global Pistons? (GP) has common stock with a market value of $ 430 million and debt with a value of $ 249 million. Investors expect a 13 % return on the stock and a 5 % return on the debt. Assume perfect capital markets. a. Suppose GP issues $ 249 million of new stock to buy back the debt. What is the expected return of the stock after this? transaction, round to two decimal places? b. Suppose instead GP issues $ 55.12 million of new debt to repurchase stock. i. If the risk of the debt does not? change, what is the expected return of the stock after this? transaction? ii. If the risk of the debt? increases, would the expected return of the stock be higher or lower than when debt is issued to repurchase stock in part ?(i?)?
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Downtown Deli has 2,000 shares of stock outstanding with a par value of $1 per share and a market value of $26 per share. The balance sheet shows $2,000 in the common stock account, $9,500 in the capital in excess of par account, and $14,500 in the r..
What is the expected return to debt holders using the debt beta approach?
You own a portfolio that has $2,000 invested in Stock A and $1,200 invested in Stock B. If the expected returns on these stocks are 12 percent and 12 percent, respectively, the expected return on the portfolio is
Assume you are to receive a 30-year annuity with annual payments of $100. The first payment will be received at the end of Year 1, and the last payment will be received at the end of year 25. You will invest each payment in an account that pays 5.5 p..
A stock has an expected return of 10.7 percent, it's beta is .98, and the risk-free rate is 6.15 percent. What must the expected return on the market be?
A $1,000 par value bond is currently selling in the marketplace.
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