You are an agent who wishes to sell a $1 million life insurance policy. Your client thinks she can’t afford a policy that large, so to reduce the price you tell her you will give her 50 percent of your commission. Is this legal or ethical? To increas..

You are planning your retirement in 10 years. You currently have $165,000 in a bond account and $605,000 in a stock account. You plan to add $7,500 per year at the end of each of the next 10 years to your bond account. How much can you withdraw each ..

An asset used in a fouryear project falls in the fiveyear MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $8,900,000 and will be sold for $1,930,000 at the end of the project. Required: If the tax rate is 30 percent..

You own a stock portfolio invested 25 percent in Stock Q, 25 percent in Stock R, 20 percent in Stock S, and 30 percent in Stock T. The betas for these four stocks are 1.7, .6, 1.8, and .9, respectively. What is the portfolio beta?

Common Stock valuation: Negative growth, Nick is a security analyst in an investment banking firm. His supervisor asked him to evaluate a preferred stock. The par value of the preferred stock is $100 and it pays an annual dividend of $5.30 per share...

LIS Company has $50 million in longterm debt, $75 million in shareholder’s equity [both figures are market value basis]. The cost of equity is 14%, cost of longterm debt is 12% and the tax rate is 25%. What is the weighted average cost of capital [..

Suppose you are planning to purchase a house for $265,500. You have a sufficient savings to make a down payment of 12.5%, and are interested in making weekly mortgage payments. The bank has offered you a rate at 8.25% for a 20year mortgage. What is ..

The real riskfree rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2year Treasury security yields 6.2%. What is the maturity risk premium for the 2year security?

The firm’s global competitiveness is mainly dependent on:

You purchased 2,000 shares of Zero Technologies several years ago at $50 per share. The company does not pay a regular cash dividend. You want to “manufacture” your own dividend by selling a little bit of stock each quarter. The company’s stock is cu..

Alpha Company, U.S.based manufacturer of industrial equipment, just purchased a Korean company that produces plastic nuts and bolts for heavy equipment. Alpha's weighted average cost of capital is 10%. Given this information, determine whether a for..

You purchase 6,500 bonds with a par value of $1,000 for $981 each. The bonds have a coupon rate of 10.4 percent paid semiannually, and mature in 10 years. How much will you receive on the next coupon date? How much will you receive when the bonds mat..
