Reference no: EM131216125
Case- Done individually.
Part 1: Publically Traded Debt and Equity
1. Katherine Graham became CEO of the Washington Post Company and took the company public. The firm has been financed with debt in the form of a coupon bond and has been financed with equity through an IPO.
a. At issue the AA coupon bonds yielded 6% and had a term of 25 years. Model the cash flow of this bond at issue:
b. It is 10 years later and AA 15 year corporate paper yields 5%. How much do the Washington Post bonds cost in the secondary market?
c. Washington Post stock has a 2% dividend and the stock trades at $68 per share. What is the annual dollar amount of the dividend?
2. A CEO of a publically traded company is an Agent of the Principal(s).
a. Who are the principals?
b. What is the chief task of a CEO of a publically traded company?
3. Suppose Ms. Graham and her CFO decide to invest $1.5mil of the company's cash in 1 year Treasury Zeros that yield 1.5%.
a. How much will one of these bonds cost?
b. How many of these bonds will they be able to buy with $1.5mil?
c. What will be the value of the bonds at maturity?
d. Suppose at maturity these funds need to be sent to the U.K for the expansion of the business in Europe, and the spot rate is 1 GBP = $0.61. What will be the value of this cash position in London at maturity of the Treasury Zeros?
Part 2: A Financial Asset and Time Value of Money in Decision Making
4. Suppose Katherine Graham decides to buy a property in Washington D.C. for her newspaper company. The asking price is $750,000. And the closing bid made by her is $660,000.
a. What is the dollar amount and percentage of the spread?
b. What does a spread like this make you begin to suspect about the property market prices in Washington? Select all that apply.
i. The market is efficient
ii. The market is inefficient
iii. I need more information
iv. There are more buyers than sellers
v. There are more sellers than buyers
c. Ms. Graham decides to apply for a mortgage at the Capitol City Federal Credit Union. 30 year mortgages have an interest rate of 4.2% while 15 year mortgages have an interest rate of 3%. Calculate both monthly payments given that she wishes to finance 75% of the purchase price.
d. What is the debt/equity split on this asset immediately upon financing the property?
e. Ms. Graham and her CFO don't like the term of the 30 year mortgage, and don't like the cash flow of the 15 year mortgage. Model your recommendation to them and explain.
f. Name two risks priced in the mortgage interest rates quoted and define them.
|
Discuss the budgeting tool utilized by both government types
: Discuss budgeting tools utilized by government types. Discuss impact of market inefficiencies on both government types. Discuss the use of rainy day funds by the state and whether or not something similar would work for the federal government.
|
|
Find the marginal pdf for one of the three random variables
: Find the constant . - Find the marginal PDF for a subset of two of the three random variables. - Find the marginal PDF for one of the three random variables.
|
|
How does the business maintain its financial records
: How does the business maintain its financial records? Who does the accounting for the business? What accounting or records is used? Who periodically reviews and analyzes the accounting records? What reports are generated?
|
|
Design the circuit for the formation of pre-groups
: Design the circuit for the formation of pre-groups and reconversion according to Illustration 166 and Illustration 167. The bandwidth of the source signal - filtered noise - corresponds precisely to the bandwidth of a telephone signal of 300 -3400..
|
|
What is the dollar amount and percentage of the spread
: What is the dollar amount and percentage of the spread? What does a spread like this make you begin to suspect about the property market prices in Washington? Select all that apply.
|
|
Determine the bias conditions for the transistor
: Calculate a value for RC1 to achieve a mid-band voltage gain of approximately -10. Determine the bias conditions for the transistor (i.e. collector voltage, base voltage, emitter voltage, collector current and emitter current)
|
|
Why is the demodulated source signal time staggered
: Set the parameters according to Illustration 160. Select as always the sampling rate and block length at 1024. The same carrier is used here for modulation and reconversion or demodulation.
|
|
Prepare the journal entries on 30 september 2015
: Prepare the journal entries on 30 September 2015 in the general journal of LEPARA Traders to prepare for the admission of Lenyora as a partner, and to record the dissolution of LEPARA Traders. Apply the accounting procedure which is based on the l..
|
|
Examine the spectra of the modulated signals
: Develop the demodulation circuit corresponding to Illustration 154. Rectification should be shown by the „absolute value" process (module "arithmetics"), the RC circuit by lowpass filtering. See also Illustration 155
|