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T or F - Other things held constant, an increase in the discount rate of a stock will result in an increase in its price.
T or F - Other things held constant, a decrease in the cost of capital will result in an increase in a project's payback period.
T or F - Short-term financing may be riskier than long-term financing since, during periods of tight credit, the firm may not be able to rollover (renew) its debt.
T or F - All other things equal, for a given percentage change in the discount rate on a bond, the price of the bond will change by a greater percentage the shorter its maturity.
T or F - Holders of well-diversified portfolios can ignore systematic risk.
T or F - If the NPV of a project is positive, the IRR of the project is always greater than the discount rate.
The real risk-free rate is 3.05%, inflation is expected to be 2.60% this year, and the maturity risk premium is zero. Ignoring any cross-product terms, what is the equilibrium rate of return on a 1-year Treasury bond?
Country Markets has an unlevered cost of capital of 12 percent, a tax rate of 38 percent, and expected earnings before interest and taxes of $15,700. The company has $11,000 in bonds outstanding that have a 6 percent coupon and pay interest annually...
You estimate the following probability distributions of returns for the stock of the Beranek Company: What is the standard deviation, in percentages, of the stock?
Delivery and installation of the new line are expected to cost an additional $100,000. Assuming Fleming's marginal tax rate is 40 percent, calculate the net investment for the new line.
Valdes Enterprises is considering issuing a 10-year convertible bond that would be priced at its $1,000 par value. The bonds would have an 8.00% annual coupon, and each bond could be converted into 20 shares of common stock. What is the estimated flo..
What is the yield to maturity on a Treasury STRIPS with 11 years to maturity and a quoted price of 63.695?
A project will require an initial investment of 76 million dollars in year 0, and is expected to generate equal yearly cash flows of 37 million dollars for the following 5 years. The company's WACC is 10%. What is the regular payback period?
In the Modigliani Miller perfect world with no taxes, if we assume that the effect of adding debt to firm's capital structure is exactly balanced by an increase in the cost of equity as more debt is added, what is the effect of increased debt usage o..
What is the present value of the following annuity? 4837 every quarter year at the end of the quarter for the next 13 years, discounted back to the present at 8 percent per year, compounded quarterly?
A business borrows $297,268 for 12 years at an annual rate of interest of 7.4%. If payments are annual and the loan will negatively amortize by $45,318, what will be the annual payment required? Put your answer in as a positive number. What is the pr..
Star Light & Power increases its dividend 4.1 percent per year every year. This utility is valued using a discount rate of 12 percent, and the stock currently sells for $41 per share. If you buy a share of stock today and hold on to it for at least t..
Calculate Benchmarks return on equity for 2007 as reported. Calculate what Benchmark's return on equity would have been in 2007 if the company had issued the additional debt and had repurchased ordinary shares before the year began.
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