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Evaluate whether the following statements are ture or false. If it is False. Please explain why and make it correct.
1. The Glass-Steagall act of 1993 separated commercial banking from investment banking.
2. A security with a beta of zero is risk free.
3. If a stock liew above the securities market line, it is overvalued.
4. There is an overwhelming majority of evidence against market efficiency: if you find a profitable trading strategy, you immediately tell the world how to trade.
5. When a risk-free asset is available, the minimum variance portfolio is the optimal portfolio for all risk-averse investors.
Southern Home Cookin' just paid its annual dividend of $.70 a share. The stock has a market price of $28 and a beta of 0.9. The return on the U.S. Treasury bill is 4 percent and the market risk premium is 12 percent. What is the cost of equity?
Buffelhead's stock price is $221 and could halve or double in each six-month period (equivalent to a standard deviation of 97%). Assume that you own an American put option on Buffelhead stock with an exercise price of $221. Calculate the value of the..
Assumed the betas for securities A,B, and C are shown here. Security Beta A 1.4 B .80 C -.90. Calculate the change in return for each security if the market experiences an increase in its rate of return of 13.2% over the next period. Calculate the ch..
Sandersen Inc. sells minicomputer. During the past year, the company sales were 3.17 million. The cost of its merchandise sold came to 1.85 million and cash operating expenses were 340,000; depreciation expense was 100,000 and the firm paid 146,000 i..
Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. The company also has two bond issues outstanding. What are the company's capital structure weights on a book value ba..
The dividend for Weaver, Inc., is expected to grow at 15 percent for the next 4 years before leveling off at a 5.4 percent rate indefinitely. If the firm just paid a dividend of $1.09 and you require a return of 11 percent on the stock, what is the m..
Which of the following bonds as the greatest price change for a given change in interest rates?
Money Market Hedge of Payables. Hawkes Imports, a U.S firm, imports sauvignon blanc wines from New Zealand. It has payables of New Zealand dollars (NZD) 1,000,000 in six month. The treasurer of Hwakes is considering a money market hedge and is faced ..
liquidity ratios. edison stagg and thornton have the following financial information at the close of business on july
You are currently in the 9th year of a 30-year fixed rate, fully amortized mortgage with monthly payments, with the lock-in period of 10 years (prepayment penalty is 2% of the remaining balance). Assume that rate doesn’t change over the life of the l..
A fully amortizing mortgage loan is made for $100,000 at 5 percent interest for 25 years. Payments are to be made monthly.
Maese Industries Inc. has warrants outstanding that permit the holders to purchase 1 share of stock per warrant at a price of $28. Calculate the exercise value of the firm's warrants if the common sells at each of the following prices: What dollar co..
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