Three call options on a stock have the same expiration date and strike prices of $55, $60, and $65. The market prices are $3, $5, and $8, respectively. Explain how a butterfly spread can be created. Construct a table showing the payoffs from the stra..
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Briefly describe the change from the current and prior years in each of these key areas and determine if the changes would be positive or negative from an investor / stockholder's view.
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Delta Ray Brands Corp. just completed their latest fiscal year. The firm had sales of $16,306,200. Depreciation and amortization was $898,000, interest expense for the year was $804,700, and selling general and administrative expenses totaled $1,513,..
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In November 2015 a trader buys five March 2016 E-mini S&P 500 Futures contracts at 2104.25. A single E-mini S&P 500 futures contract equals ($50) x (Index Value). The initial margin is $5,060 and the maintenance margin is $4,600 per contract. In Janu..
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Billy’s Exterminators, Inc., has sales of $607,000, costs of $314,000, depreciation expense of $66,000, interest expense of $43,000, a tax rate of 35 percent, and paid out $78,000 in cash dividends. What is the addition to retained earnings?
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ABC has a proposed project which will generate sales of 179 units at a selling price of $226 each. The fixed costs are $11,145 and the variable costs per unit are $83. The project requires $151,014 of machinery which will be depreciated on a straight..
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Graphic Designs has 68,000 shares of cumulative preferred stock outstanding. Preferred shareholders are supposed to be paid $1.60 per quarter per share in dividends. However, the firm has encountered financial problems and has not paid any dividends ..
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Jefferson International’s debt is less expensive than its equity. If it could issue more debt without changing the cost of debt or equity, which of the following would occur?
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You are an investor in company which is an auto parts supplier. They will pay a dividend next year of $0.80 per share and are expected to grow at an annual rate of 2%. The price of the stock is currently $37.24. What is the dividend yield? Why divers..
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Tool Manufacturing has an expected EBIT of $95,000 in perpetuity and a tax rate of 35 percent. The firm has $155,000 in outstanding debt at an interest rate of 8.9 percent, and its unlevered cost of capital is 15 percent. What is the value of the fir..
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Mellott Corp. has an equity value of $13,355. Long-term debt is $8,500. Net working capital, other than cash, is $3,235. Fixed assets are $17,680 and current liabilities are $1,750. How much cash does the company have? What is the value of current as..
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You are using your comparable company set to value Jimmy Jones & Co. The average EBITDA multiple of the comps is 7.0x Jimmy Jones' EBITDA is 200M, and their net debt is 50M. What is Jimmy Jones' impaled equity value? Which of the following is NOT an ..
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