20. The following information is related to the pension plan of King, Inc. for 2008. Actual return on plan assets $200,000 Amortization of unrecognized net gain 82,500 Amortization of unrecognized prior service cost 150,000 Expected return on plan assets 230,000 Interest on projected benefit obligation 362,500 Service cost
Consider an option on a non-dividend-paying stock when the stock price is $30, the exercise price is $29, the risk-free interest rate is 5% per annum, the volatility is 25% per annum, the time to maturity is four months, and the stock is due to go ex-dividend in 1.5 months. The expected dividend is 50 cents. (a) What is the p
Having previously identified the location of its greenfield investment, Acme, a multibillion dollar public MNE that is incorporated in the U.S.. must next obtain external financing for its proposed overseas production facility. It has been estimated that the acquisition will cost $500M and all funds will be secured in the U.S. M
1. Profitability and solvency objectives in business are: a. secondary to the objective of growth b. complementary objectives c. of primary importance in most businesses. d. generally ignored by established businesses. 2. As a company's prospects change over time, the ratings of its outstanding bonds: a. would tend to de
9. (a) What are the reasons for the existence of monopoly? (b) Which of these did Alcoa use to establish and retain a monopoly? Problem 1 If the market demand and supply functions for pizza in Newtown were: QD = 12,000 - 1,000P QS = -4,000 + 1,000P Determine algebraically the equilibrium price and quantity of pizza.
9.8 Using the returns for the period 1981 to 1985 listed below, calculate the five-year holding period return on the S&P 500 index. 1981 1982 1983 1984 1985 S&P 500 index return(%) -4.97 21.67 22.57 6.19 31.85 10.2. Suppose you have invested only in tw
The buyer of a long call option... a) has a maximum loss equal to the premium paid. b) has a gain equal to but opposite in sign to the writer of the option. c) has an unlimited maximum gain potential. d) all of the above.
What are the appropriate techniques for mitigating risks in business?
Three put options on a stock have the same expiration date and strike prices of $55, $60, and $65. The market prices are $3, $5, and $8, respectively. Explain how a butterfly spread can be created. Construct a table showing the profit form the strategy. For what range of stock prices would the butterfly spread lead to a loss?
Three month European put options with strike prices of $50, $55, and $60 cost $2, $4, and $7, respectively. (a) What is the maximum gain when a butterfly spread is created from the put options? (b) What is the maximum loss when a butterfly spread is created from the put options? (c) For what two values of S(T) does the hold
?Website Look and Feel: Write a paper that describes how the "look and feel" differs for Continental Airlines website. Include an evaluation of the ease of navigation and overall impact and strategy of the website. Points to address for Continental Airlines: ?Look and feel of Website ?Ease of navigation ( difficulty
A deposit instrument offered by a bank guarantees that investors will receive a return during a 6-month period that is the greater of (a) zero and (b) 40% of the return provided by a market index. An investor is planning to put $100,000 in the instrument. Describe the payoff as an option on the index. Assuming that the ri
6.During 20X7, Moore Corp. had the following two classes of stock issued and outstanding for the entire year: * 100,000 shares of common stock, $1 par. * 1,000 shares of 4% preferred stock, $100 par, convertible share for share into common stock. Moore's 20X7 net income was $900,000, and its income tax rate for the year
At December 31, 20X0, Welsch, Inc., had 500,000 shares of common stock outstanding. On October 1, 20X1, an additional 120,000 shares of common stock were issued for cash. Welsch also had $4,000,000 of 8% convertible bonds outstanding at December 31, 20X1, which are convertible into 100,000 shares of common stock. No bonds we
A. Why is it important to keep paid-in capital separate from earned capital? B. As an investor, is paid-in or earned capital more important? Why? C. As an investor, are basic or diluted earnings per share more important? Why?
Stocks X and Y have the following historical returns: Year Stock X Stock Y 2000 18.0% 37.0% 2001 -5.0% 10.0% 2002 0.0% -37.0% 2003 32.0% 11.0% 2004 22.5% -7.0% 2005 -6.0% 36.0% 2006 11.0% 23.5% a) Calculate the average rate of return for each stock during the period. b) Assume that you had a portfolio consisti
Let's look two of Able Corporation's two major competitors: Smith & White Corporation (S&W), a very large and aggressive domestic manufacturer, and Makatume, a Japanese powerhouse. Smith & White markets a full line of moderate quality professional and consumer tools. It also markets such products as lawn and garden, hobby too
Some people believe the best way to manage exchange rate exposure is to do nothing. They believe that currencies are unpredictable. They believe trying to manage currency risk is useless and a waste of money because of this unpredictability. Explain how exchange rate exposure may create risks and opportunities for a domestic
44. Rogers Company holds 80 percent of the common stock of Andrews, Inc., and 40 percent of this subsidiary's convertible bonds. The following consolidated financial statements are for 2004 and 2005: Rogers Company and Consolidated Subsidiary
Identify three additional stocks in the Ford Motor Company industry and determine the five-year average return.
This is an MBA level question for which I am seeking a detailed and complete response. Sue Wong, an investment advisor for National Securities, Inc., was preparing to meet with a client, Rick Thompson. Based on Wong's recommendation, Thompson had previously added an auto parts company, National Auto Inc., to his portfolio o
What factors impact the success of overseas relocations?
Suppose that you are the manager and sole owner of a highly leveraged company. All the debt will mature in 1 year. If at that time the value of the company is greater than the face value of the debt, you will pay off the debt. If he value of the company is less than the face value of the debt, you will declare bankruptcy and the
Which 2 companies would be good growth stocks companies?
4. Springsteen Music Company earned $820 million last year and paid out 20 percent of earnings in dividends. a. By how much did the company's retained earnings increase? b. With 100 million shares outstanding and a stock price of $50, what was the dividend yield? (Hint: First compute dividends per share.) 12. Laser Elec
Can you help me get started on this assignment? Tammy Weber had only a few hours left to decide whether to exercise a call option on CeeJay company stock. The call option has an exercise price of $54. Tammy originally purchased the call 6 months ago for $400 (or $4 per share) a) For what range of stock prices should Tammy
Reading Railroad common stock is currently priced at $30, and its 8% convertible debentures (issued at par, or $1,000) are priced at $850. Each debenture can be converted into 25 shares of common stock at any time before 2005. What is the conversion price (CP) and the conversion value of the bond?
1. A portfolio of nondividend-paying stocks earned a geometric mean return of 5.0% between January 1, 1998, and December 31, 2004. The arithmetic mean return for the same period was 6.0%. If the market value of the portfolio at the beginning of 1998 was $100,000, what was the market value of the portfolio at the end of 2004?
So far, things have gone well with Dr. Washington. Before you wrap up your meetings with Dr. Washington and he begins investing, you decide to spend a little time sharing information with him about using derivatives to manage risk and enhance returns in his stock portfolio. You decide the best way to illustrate this is via a
The common shares are trading for $90 a share. You have employee stock options to purchase 1,000 shares for $85 per share. The options mature in three years. The annualized vitality of stock over the past 100 days has been 25 percent. The company's current dividend yield is 1.5 percent, and the interest rate is 6 percent. (Assum