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Paradox of "Safe" Assets:Explain why the very assets that regulators have deemed safe for capital requirement calculations for banks have been the source of recent financial crises. Please provide two specific examples and explain them in some detail. Curse of Zombies:Explain the different risk-return tradeoff (from same class of assets) faced by under-capitalized versus well-capitalized banking sectors, focusing on their incentives from the standpoint of bank shareholders. In turn, explain why leaving banking sectors under-capitalized after a crisis leads to delayed recoveries, providing one specific example of such an outcome in recent crises and the asset-choices made by the corresponding under-capitalized banking sector(s). Market versus Book: Provide three rationales why equity market-based measures of leverage and volatility of a financial firm help predict its distress better than measures based on book (or accounting) and regulatory values. Pie in the Sky: The European Central Bank completed its Asset Quality Review of over 100 large banks of the Eurozone this year. The stress test that was part of this exercise revealed capital shortfall for about 25 banks, totaling to about Euro 25 billion. Market data-based calculations reveal many more banks having capital shortfall totaling to an amount which is 5-10 times as large. Please explain this "discrepancy" in light of your answer to the previous question. Stressful? Or Not Really! Regulatory stress tests predict a phase of 5-6 quarters of recovery following an initial 2-3 quarters of severe stress for the financial sectors being stress-tested. What bias does this lead to as far as regulatory assessments of financial sector health is concerned, focusing on the errors of omission in assuming the recovery phase? Explain one possible way of "fixing" these errors. Living Will or Funeral Plan: Explain the tradeoff in subjecting distressed financial firms to "orderly liquidation" versus allowing them to be reorganized as "bridge banks", the two options feasible under the Dodd Frank Act.
Compute the bond's expected rate of return? Determine the value of the bond to you, given your required rate of return.
The projected earnings before interest and taxes are $58,600. What are the anticipated earnings per share if the debt is issued? Ignor taxes.
below are the income statements for the spanish hoyos group. the company asks you to analyse these statements and
Compute the monthly payments for an add-on interest loan of $7,000, with an annual interest rate of 9 percent and a term of 1 year. Round to the nearest cent as needed.
obtain an annual report from a corporation that is interesting to you. using techniques you have learned in the
write a 750-1250 word response to the following - be sure to cite your references and follow apa style. large business
Being able to estimate future earnings of a company over at least five years is a critical decision variable for Warren Buffet when he analyzing whether to buy an interest in a company.
assume that you manage a 10.00 million mutual fund that has a beta of 1.05 and a 9.50 required return. the risk-free
McGonnigal has outstanding 250,000 shares of $10 (dividend) preferred stock and 1 million shares of common stock ($1 par value). McGonnigal's average tax rate is 35 percent, and its marginal rate is 40 percent.
The interest rate on the debt will be 10 percent. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.
a tax-exempt bond was recently issued at an annual 8 percent coupon rate and matures 20 years from today. the par
Martin Corporation is financed with 40% debt and 60% common equity. The after tax cost of debt is 10% and the cost of common equity is 14%. What is Martin's weighted average cost of capital?
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