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Filer Manufacturing has 8.6 million shares of common stock outstanding. The current share price is $56, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $70.6 million and a coupon rate of 7.3 percent and sells for 108.0 percent of par. The second issue has a face value of $60.6 million and a coupon rate of 7.8 percent and sells for 109.5 percent of par. The first issue matures in 8 years, the second in 27 years.
Suppose the company’s stock has a beta of 1.2. The risk-free rate is 3.4 percent, and the market risk premium is 7.3 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 35 percent. What is the company’s WACC?
Which of the following are bought and sold in Money markets?
The common stock of Triangular File Company is selling at $97. A 26-week call option written on Triangular File’s stock is selling for $15. The call’s exercise price is $107. The risk-free interest rate is 11.4% per year. Suppose that puts on Triangu..
If the dividend per share expected during the coming year, D1, is $3.00 and g = 4%, at what price should a share sell?
The price of a non-dividend paying stock is $19 and the price of a three-month European call option on the stock with a strike price of $20 is $1.2. The risk free rate is 4% per annum. What is the price of a three-month European put option with a str..
Determine the yield (percentage return on investment) to an investor from Argentina who engages in covered interest arbitrage.
According to the CAPM, would the expected rate of return on a security with a beta less than zero be more or less than the risk-free interest rate? Why would investors be willing to invest in such a security? (Hint: Look back to the auto and gold ..
Suppose the price increases to 1,020.00. What is the bond's yield to maturity??
bank has used its internal models to estimate the regular and stressed value-at-risk for its trading book as $250,000 and $500,000
The company that you work for is considering bidding on a government contract to rebuild an old bridge that has reached the end of its useful life. The two-year contract will pay the firm $11.5 million at the end of the second year. How would you est..
Having risen from virtually nothing in the early 1980s, stocks and stock options comprised roughly half of the average CEO compensation in public US firms in 1995. Calculate the covariance between the returns on VBN and the Wilshire 5000 index. Obsol..
The first financial statement a firm produces is the _____.
Jane Barhop purchased a stock for $45 one year ago. That stock is now worth $65. During the year, the stock paid a dividend of $2.50. What was Jane's total return from holding the stock?
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