You are an investor in common stock, and you currently hold a well-diversified portfolio that has an expected return of 10%, a beta of 1.2, and a total value of $12,000. You plan to increase your portfolio by buying 1,000 shares of X at $15 a share. ..
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Compensating balances are frequently a part of revolving lending arrangements with banks, yet they add to the cost of financing for the borrower. Why, then, would borrowers agree to such terms? What other types of alternative financing are available?
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You buy a 5-year, 10% coupon bond with face value $1000 today. The market interest rate currently is 10% also. What is the market price of the bond today? You hold the bond for a year and sell it off a year later when the interest rate is 8%. What is..
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Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 346,000 –$ 48,000 1 49,000 24,400 2 69,000 22,400 3 69,000 19,900 4 444,000 15,000 Which ever project you choose, if any, you require a 16 percent return on..
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To plant and harvest 20,000 bushels of corn, Farmer incurs fixed and variable costs totaling $33,000 at the time of the harvest. The current spot price of corn is $1.80 per bushel and the six-month interest rate is 4.0%. If Farmer decides to hedge, w..
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Iron maiden became the first heavy -metal band to sell bonds when it arranged a $30 million deal in february 1999. the collateral on the bonds (and source of cash flow for interest and principal payments) consisted of future royalties from the band's..
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A warrant is basically a long-term option that enables the holder to sell common stock back to the firm at an agreed upon price, at a specified time in the future. Generally, warrants are distributed along with preferred stock in order to make the pr..
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Suppose you plan to retire at age 70, and you want to be able to withdraw an amount of $62,000 per year on each birthday from age 70 to age 100 (a total of 31 withdrawals). If the account which contains your savings earns 5.7% per year simple interes..
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Diversification occurs when stocks with low correlations of returns are placed together in a portfolio. Identify at least one type of firm that might exhibit low correlations of returns with the overall stock market? Explain why the correlations of t..
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How can an understanding of personal finance benefit you?- Define budget planning. What elements must be assessed in budget planning?
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If we input a positive PV in our calculator, we get a negative FV if that is what we are solving for. The reverse it true as well. Put in a positive, and the answer is negative. This is true of all financial calculators and is referred to as the ____..
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Find the operating cash flow for the year for Harper Brothers, Inc. if it had sales revenue of $319,800,000, cost of goods sold of $142,200,000, sales and administrative costs of $39,900,000, depreciation expense of $66,400,000, and a tax rate of ..
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