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Discuss the following two scenarios.
Scenario 1: Is the following statement true or false? Explain.
When the 56-year-old founder of Gulf & Western, Inc. died of a heart attack, the stock price immediately jumped from $18.00 a share to $20.25, a 12.5% increase. This is evidence of market inefficiency because an efficient stock market would have anticipated his death and adjusted the price beforehand. Assume that no other information is received and the stock market as a whole does not move. Is the above statement true or false? Explain.
Scenario 2: Is the following statement true or false? Explain.
On January 10, 1985, the following announcement was made: "Early today the Justice Department reached a decision in the Universal Product Care (UPC) case. UPC has been found guilty of discriminatory practices in hiring. For the next five years, UPC must pay $2 million each year to a fund representing victims of UPC's policies." Should investors avoid buying UPC stock after the announcement because the litigation will cause an abnormally low rate of return? Assume market efficiency. Explain.
Mill Due Corporation is expected to pay a dividend of $5.00 per year on its common stock forever into the future. It has no growth prospects whatsoever.
Why are interest rates on the short-term loans not necessarily comparable to each other? Provide three possible reasons.
Computation of the interest on the loan payable in due and in advance and What will be the face value of the note assuming that Interest paid when the loan is due
Estimate the vulnerability of each company to external forces such as a recession, higher interest rates, & global competition.
Determine the unit contributions and contribution margins for each brand at the unit level
What are some activities and exercises that can improve a student's learning in this area? What are the current and future applications and revelance to the workplace?
American Superconductor switch; Westboro corporation plans to raise money through a stock offering Andi Esposito. Telegram & Gazette. Worcester, Mass.: Aug 26, 2003. pg. E.1
Describe how moral hazard and adverse selection materialized during the financial failure of A.I.G
Find the market return for an asset with a required return of 16% and a beta of 1.10 when the risk-free rate is 9% and find the beta for an asset with a required return of 15 percent.
Establish an estimated growth rate in earnings & dividends for British Petroleum. Note, in the dividend growth model, "g" is growth rate for earnings & dividends.
Why might a firm use a "local" capital structure at the particular subsidiary which differs substantially from its "global" capital structure?
Invester banker five enters into a best efforts arrangement to try and sell ten million shares of stock at $15.00 per share for Rogers Company. The investment banker five incurs expenses of $300,000 in floating the issue and the company incurs expens..
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