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MC Finance Questions

A characteristic of an efficient market is that A) prices are equal for all securities B) bid-asked spreads are large C) prices reflect all available information D) all investors receive a positive rate of return An important implication of the idea that markets are efficient is A) an investor can make money by buy

Equilibrium Stock Price

Please help with the following problem: The risk-free rate of return, rRF, is 11%; the required rate of return on the market, rM, is 14%; and Schuler Company's stock has a beta coefficient of 1.5. a) If the dividend expected during the coming year, D1, is $2.25, and if g = a constant 5%, at what price should Schuler's stoc

Return from Hedged Position

Mike Lane will have $5 million to invest in five -year U.S. Treasury bonds three months from now. Lane believes interest rates will fall during the next three months and wants to take advantage of prevailing interest rates by hedging against a decline in interest rates. Lane has sufficient bonds to pay the costs of entering into

Lear, Inc.: Alternative Financing Plans

14. Lear, Inc., has $800,000 in current assets, $350,000 of which are considered permanent current assets. In addition, the firm has $600,000 invested in fixed assets. a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 10 percent. Short-term financing currently

The Power of Financial Analysts

Do you think financial analysts have too much power and can they really move the market on a particular stock or industry? If so, provide examples. I do not know if I would say this as an absolute. Don't they have rules by which they must abide? Regardless, I do believe they have the power to move the market on a particular s

Personal Finance for Investments in Property

IN110-0903B-14 Personal Finance Concepts Assignment Name: Unit 2 Individual Project Deliverable Length: 1-2 pages Details: Bernie and Pam Britten are a young married couple beginning careers and establishing a household. They will each make about $50,000 next year and will have accumulated about $40,000 to invest. They

Computing price of Stock

See attached file. 17) Eastern Telecom is trying to decide whether to increase its cash dividend immediately or use the funds to increase its future growth rate. It will use the dividend valuation model originally presented in Chapter 10 for purposes of analysis. The model was shown as Formula 10-9 and is reproduced below

Finance - Multiple Choice Questions

1. The ________ is a weighted average of the cost of funds which reflects the interrelationship of financing decisions. 1. 1. risk-free rate 2. 2. nominal cost 3. 3. risk premium 4. 4. cost of capital 2. The firm's optimal mix of debt and equity is called its 1. 1. optimal ratio. 2. 2. maximum we

Cost Classification for Raw Materials

For each of the following costs, identify whether the item is a variable or fixed cost, direct or indirect cost, and controllable or uncontrollable cost. (For example: Plant Utilities would be a variable, indirect, and controllable cost.) Not all items will fit into each category. Label items that do not fit a categories as not

Small business loan and pledge assets

Assume you started a new business last year with $60,000 of your own money that was used to purchase equipment. Now you are seeking a $30,000 loan to finance the inventory needed to reach this year's sales target. You have agreed to pledge your venture's delivery truck and your personal automobile as support for the loan. Your s

Financial Analysis of an Auditors Report

Do you think that the explanatory notes, supplementary schedule, Management's Discussion and Analysis, 10-K filing, Auditor's report and Proxy statements provide more information for financial analysis than do the actual financial statements for a company?

MBA finance

Company considering of project up front paid today at t = o .The project will generate positive cash flow of $60,000 for the next 5years.The project NPV is $75,000 and the company WACC is 10%. What is the company's simple regular payback?

Personal Finance for Investing Savings

Marcia and Phil Helm, a couple in their thirties, have been married for several years. They have no children, and each has a professional career. Marcia is a trainee for a management position at a large department store, and Phil is an engineer at an electronics firm. Their careers have promising futures, but neither has excepti

A Company's Debt Entries

Rolanda Marshall Company, organized in 2006, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2007. 1/2/07 Purchased patent (8-year life) $ 350,000 4/1/07 Purchased goodwill (indefinite life) 360,000 7/1/07 Purchased franchise with 10-ye

Contribution margin, break even point, margin safety ratio, fixed costs

Tyson Company bottles and distributes LO-KAL, a fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 70 cents per bottle. Management estimates the following revenues and costs. Net sales $2,500,000 Selling expenses-variable $ 90,000 Direct materials 360,000

E-Company - Prepare income statements under variable (contribution margin) and traditional (absorption) costing, What are E's contribution margin ratio, gross profit ratio and operating (net) income ratios, etc..

The E-Company manufactures trendy, high-quality moderately priced watches that it sells on the Internet. As the company's senior financial analyst, you are asked to analyze the overall profitability fo the current year. The CFO has heard that there are two different approaches for preparing income statment.s You are asked to sh

Returns and Deviations of the Economy

Based on the information provided in the attachment, what is the expected return on an equally weighted portfolio of the stocks listed and what is the standard deviation of a portfolio invested 25 percent in A and B and 50 percent in C?

Task 2b: Problem Set

1. Consider a firm with a trading book valued at $100 million. The return of these assets is distributed normally with a yearly standard deviation of 25 percent. The firm can liquidate all of the assets immediately. How much capital should the firm have so that 99 days out of 100, the firm's return on assets is high enough that,

Debt Policy Importance

Executive Chalk is financed solely by common stock and has outstnading 25 million shares with a market price of $10 a share. It now announces that it intends to issue $160 million of debt and to use the proceeds to buy back common stock. a. How is the market price of the stock affected by the announcment? b. How many shares ca

Limited Liability Corporation and Partnership

Write a 700- to 1,050-word answer in which you explain roles of limited liability corporations and partnerships. If you were establishing your own business, under what circumstances would you choose one instead of the other? APA format

Preparation of a Cash Budget

The preparation of a cash budget serves which of the following purposes? to estimate the amount of cash flows to optimize the price of the firms common stock b. to calculate the amount of future cash flows to achieve the optimal level of financing during the forecast period c. to determine the amount and timing of short-ter

What conditions favor the use of long-term debt?

1. When a number of alternative methods of long-term financing are under considerations; what conditions favor the use of long-term debt? 1a.When a number of alternative methods of long-term financing are under considerations; what conditions favor the use of common stock. Please explain.

A call center owes your company money

Your company has entered into written contracts with the call center in Fabulous County, Florida. Recently, the call center has not been paying for your company's services. The call center owes your company amounts between $15,000 and $25,000. Your committee has the task of deciding whether to bring a lawsuit to collect these am

XYZ Stock

Assume that you plan to buy a share of XYZ stock today and to hold it for 2 years. Your expectations are that you will not receive a dividend at the end of Year 1, but you will receive a dividend of $9.25 at the end of Year 2. In addition, you expect to sell the stock for $150 at the end of Year 2. Question: If your expected