How much should they be willing to pay for risk reduction

Assignment Help Financial Management
Reference no: EM13917574

1. A firm has a WACC of 10% and $50,000,000 in assets. They feel that that they can reduce their WACC to 9% by doing a better job of managing risk. How much should they be willing to pay for risk reduction?

a) $450,000     b) $500,000           c) $1,000,000        d) $5,000,000

2. _____________ was passed in 2010 as a response to the Financial Crisis.

a) Bush-Cheney

b) Dodd-Frank

c) Glass-Steagall

d) Gramm-Bailey

3. Many people consider the he failure to save _____________ as the start of the financial crisis.

a) AIG

b) Goldman Sachs

c) Lehman Brothers

d) Merrill Lynch

4. Which statement is FALSE?

a) Debt levels rose the most in low income areas

b) People around the world were saving too much money

c) The Federal Reserve contributed to the housing bubble by keeping interest rates too low

d) The Strong Dollar attracted money from overseas

Reference no: EM13917574

Questions Cloud

What must be the coupon rate on the bonds : Large Industries bonds sell for $1,062.92. The bond life is 10 years, and the yield to maturity is 7.1%. What must be the coupon rate on the bonds? Assume coupons are paid once a year and the face value is $1,000.
Assuming the current market price of the stock reflects : The stock of Nogro Corporation is currently selling for $30 per share. Earnings per share in the coming year are expected to be $6. The company has a policy of paying out 40% of its earnings each year in dividends. Assuming the current market price o..
Semi-annual coupon bond outstanding : The Corner Grocer has a 7-year, 6 percent semi-annual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5 percent. Show mathematically what happens if the market yield suddenly increases to 7 percent. Elaborate in..
What adjustments should you make to your bond portfolio : Inflation has remained low for the past three years but you have come to the conclusion that trend is ending and inflation will increase significantly over the next 18 months. Assume you have reached this conclusion prior to other investors reaching ..
How much should they be willing to pay for risk reduction : A firm has a WACC of 10% and $50,000,000 in assets. They feel that that they can reduce their WACC to 9% by doing a better job of managing risk. How much should they be willing to pay for risk reduction?
At what volume of output would the two locations : At what volume of output would the two locations have the same total cost? For what range of output would location A be superior? For what range would B be superior?
The process of pooling loans into bonds is called : The process of pooling loans into bonds is called ___________. The idea that the failure of one firm can cause other firms to fail is called ___________.
The option pricing model was developed : The Option Pricing Model was developed by ________________. Hedging activities and buying insurance are examples of _______________.
Considering expanding operations to meet growing demand : A corporation is considering expanding operations to meet growing demand. With the capital expansion, the current accounts are expected to change. Management expects cash to increase by $20,000, accounts receivable by $40,000, and inventories by $60,..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Calculate vintages return on equity

Vintage, Inc. has a total asset turnover of 1.33 and a net profit margin of 6.22 percent. The total assets to equity ratio for the firm is 2.2. Calculate Vintage’s return on equity.

  What should be the value of the bond in seven years

A 25 year bond has a coupon rate of 12% and semiannual coupon payments. The required nominal yield on the bond is 10%. Assume that the yield curve is downward sloping and the yield is expected to decline to 8%. a. What would be the value of the bond ..

  Coin collection contains

Your coin collection contains 52 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2062, assuming they appreciate at an annual rate of 4.3 perce..

  Time series plot-what type of pattern exists in the data

The Seneca Children’s Fund (SCF) is a local charity that runs a summer camp for disadvantaged children. The fund’s board of directors has been working very hard over recent years to decrease the amount of overhead expenses, a major factor in how char..

  How much new long-term debt financing will be needed

At year-end 2015, Wallace Landscaping’s total assets were $1.9 million and its accounts payable were $390,000. Sales, which in 2015 were $2.1 million, are expected to increase by 20% in 2016. How much new long-term debt financing will be needed in 20..

  Find monthly savings

Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $32,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second,..

  What is the net cash flow from operating activities

What is the net cash flow from operating activities? What is the net cash flow from investing activities? What is the net cash flow from financing activities? What is the change in cash?

  Breakeven interest rate-which is profitable to call in bonds

Leyland Enterprises has $5,000,000 in bonds outstanding. The bonds each have a maturity value of $1,000, an annual coupon of 12 percent, and 15 years left until maturity. The bonds can be called at any time at a call price of $1,100 per bond. The com..

  Shoe store has decided to sell new line of shoes

The Shoe Store has decided to sell a new line of shoes that will have a selling price of $79 and a variable cost of $38 per pair. The company spent $187,000 for a marketing study that determined the company should sell 112,000 pairs per year for five..

  Number of motorcycles to expand its delivery service

A florist is buying a number of motorcycles to expand its delivery service. These will cost $87,000, but are expected to increase profits by $3000 per month over the next four years. What is the payback period in this case?

  Material ordering costs-labor costs and credit sales

Write a memo to your supervisor explaining the cash conversion cycle at your company, a manufacturer of plastic toys. Be sure to address the following: Material ordering costs, Labor costs, Credit sales (accounts receivables)

  Determine the expected value of project

Determine the expected value of a project that has a a. 10% probability of returning $1,300, b. 20% probability of returning $900, c. 30% probability of returning $600, d. 30% probability of returning $400, and e. 10% probability of returning $0

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd