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1. Suppose the risk free return is 4% and the market portfolio has an expected return of 10% and a volatility of 16%. Johnson and Johnson Corporation (Ticker JNJ) stock has a 20% volatility and a correlation with the market of 0.06.a) What is Johnson and Johnson's beta with respect to the market?b) Under the CAPM assumptions, what is its expected return?
2. Global Pistons (GP) has a common stock with a market value of $200 million and debt with a value of $100 million. Investors expect a 15% return on the stock and a 6% return on the debt. Assume perfect capital markets.a) Suppose GP issues $100 million of new stock to buy back the debt. What is the expected return of the stock after this transaction?b) Suppose instead GP issues $50 million of new debt to repurchase stock.i) If the risk of the debt does not change, what is the expected return of the stock after this transaction?ii) If the risk of the debt increases, would the expected return of the stock be higher or lower than in part (i)?
Calculate the firm's current earnings per share (EPS) and price/earnings (P/E) ratio-Compare and contrast the stockholders' position under the dividend and repurchase alternatives
Kuhns Corp. has 200,000 shares of preferred stock outstanding that is cumulative. The dividend is $6.50 per share and hasn't been paid for 3 years. If Kuhns earned $3 million this year, what could be maximum payment to preferred stockholders on p..
Explain What action should the company president take and should the order be accepted if the Executive Division plans on selling the desks in the outside market for $420
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The structure of an organization can affect the entire success of the project from initiation to closure. Identify if your organization is centralized or decentralized and evaluate benefits and weaknesses of structure.
Suppose that a firm has following Income Statement. Use this information to estimate the business risk and the financial risk as measured by the degree of operating leverage.
Describe why corporations engage in swap-driven financing, and describe the defining features of an interest rate and currency swap. Why may a corporation prefer one kind of swap contract over another?
If creditors give you no credit for payments made during the billing period, which of the following may result in much of your personal financial information becoming part of the public record?
If the portfolio has a beta of 1, how many put option contracts should be purchased and If the portfolio has a beta of 0.5, how many put options should be purchased?
Describing what is likely to happen to interest rates, deposits, and total bank reserves and What special status is awarded to the president of the Federal Reserve Bank of New York (FRBNY) in the determination of U.S. monetary policy?
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