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GeKay stock is worth $100, or $80, or $60. Investors believe that each case is equally likely so that the current share price is the average, namely $80. Suppose Mr. Satanak, the company CEO, announces that he will sell most of his holdings of the stock to diversify (and investors believe his motivation). Diversifying is known to be worth 10% of the share price ---that is, the CEO would be willing to receive up to 10% less than the shares are worth to achieve the benefits of diversification. a.If investors believe that Mr. Satanak knows the true value of the stock, how will the share price change (be precise here)if he tries to sell? (Assume that any attempt to sell is immediately observable by investors).b. If he actually goes ahead and sells (for the above reason 16a.), what must be the true share price? Explain briefly but clearly and concisely using complete sentences.
The problem considered is that of forecasting demand for single-period products before the period starts. We study this problem for the case of a mail order apparel company that ne
Mad Cat Inc. is debating between two alternative earth moving machines to use for the next 8 years. The first supplier, Double Candle, offers the necessary machinery (CCA rate = 3
Question 1: i) Each of the following statements has been put forward as an explanation of determinants of exchange rate: a) ‘the increase in the value of a currency is becau
#queM&A E-III Corp. is investigating the possible acquisition of Silicon Inc. Assume that both firms have no debt outstanding. E-III Corp. Silicon Inc. Pre-announcement stock price
I do not understand how ratios are calculated on MSN Money website. My homework assignment was to look up GM''s income statement and balance sheet for the last quarter and compare
Hello, What are the similarities and differences between project valuation and firm valuation. For example, using DCF model, by forecasting free cash flow, weighted average cost of
Question: (a) Discuss the concept of financial gearing and its implications for share price maximisation. (b) A firm has both, a current and a target debt-equity ratio of 0.
You are a ceo of a sotware firm that has limited access to debt equity markets. The average return on last year projects is 28 % . and cost of capital is 12%. would npv pr Irr be
Calculate the cost of capital for the project? (a) Describe how the weighted cost of capital for an MNC can be calculated? (b) Assume that a foreign project has a beta of 0.
I have a Finance project due and I was wondering if I could get some help with it? Please advise. Thanks..
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