Explore BrainMass


Hedging against Falling Stock Prices

Suppose you own 100 shares of Dell Inc. stock. Today it is trading at $15 per share, but you're worried Michael Dell might retire again, causing the price to go down. How would you protect yourself against his retirement, assuming you don't want to sell the shares today?

Preferred Stock: Pechstein Corporation

Pechstein Corporation issued 2000 shares of $10 par value common stock upon conversion of 1000 shares of $50 par value preferred stock. The preferred stock was originally issued at $60 per share.The common stock is trading at $25 per share at the time of conversion. Record the conversion of the preferred stock.

Financial and Economic Basics

Give a brief background on the following topics: 1. Government insurances and payment expectations 2. Commercial insurances and payment expectations 3. Liability insurances and payment expectations 4. Self-pay/ cash pay patients and payment expectations. 5. Focus on the ways in which these types are different from one a

Investment and Time Value of Money

An investment with total costs of $10,000 will generate total revenue of $11,000 for the year. Management thinks that since the investment is profitable, it should be made. Do you agree? What additional information would you want? If funds cost 12 percent, what would be your advice to management? Would your answer be different i

Robert Shiller: democratizing finance

You have been asked to write a 'briefing' article for The Economist analysing the debate initiated by Robert Shiller about democratising finance and comparing this with the kinds of regulatory measures that have been adopted in the OECD countries in the wake of the recent financial crisis. The issues you need to consider in your

Finance & Accounting

Finance & Accounting Answer the following: 1. What three accounting statements help the manager monitor a firm's performance? What can the balance sheet tell the firm about its assets and financial structure? 2. What are three types of business organizations? Explain briefly. 3. Calculate the annual depreciation cha

Calculating the return on a given stock

CDE is issuing preferred stock with dividends at 8.12% of the $25 par value. 1. Assuming a price of $26.25 per share, calculate the return on the preferred stock. 2. The preferred stock will reach maturity in 20 years. With annual dividend payments and a price of $26.25 per share, calculate the return.

Which firm is more likely to have bought the preferred stock?

You are told that one corporation just issued $100 million of preferred stock and another purchased $100 million preferred stock as an investment. You are also told that one firm has an effective tax rate of 20 percent, whereas the other is in the 35 percent bracket. Which firm is more likely to have bought the preferred? Expla

Finance Dividends and Investment Strategy

ABC pays dividends over the next 4 years: 2.50; 3.20; 4.75; and 5.20 beginning in period 1 1. After the 4th year the firm projects constant growth of 3%. Assuming investors need an 11% return, what is the current share price? 2. The CFO has proposed new investment opportunities and needs to present them to the board for app

Real Estate Finance Problem Set

1. The difference between the rate of return on assets and the cost of borrowing is: (A) financial leverage (B) spread (c) debt service (D) none of the above 2 When the rate of return on assets exceeds the cost of borrowing, it represents: (A) negative spread (B) positive spread

Integrating Finance in Assessing Health of a Business

In this course, you have expanded your understanding of finance in terms of the measures taken and implementation of financial data in a business. You have also thought about the ways that finance fits into the larger management of a going concern. How would you integrate finance in your assessment of a business' health and in

Funding for a Business

In 2-3 pages: 1. I need funding options (For a US Business; I'm a US resident so maybe US Funding options) available for a Start Up Business. 2. I need THREE clear examples of such. 3. Please help me to understand the things I need to have to get funding and to get accepted and why I may not get funding, any possible pr

Finance Dividend discount model and growth rate

Assume that XYZ has Earnings Per share of $1.79 with a .68 cent dividend and return on equity of 24%. If the stock price is $49.22 then: 1. Use the dividend discount model to estimate the return for XYZ 2. Estimate the present value of the growth opportunity. You can use Excel or do long hand.

Decision Tree and Estimation

Mark is looking at the forecasts of expected economic growth. He plans to invest $120,000 in an investment whose return would depend on the economic conditions. It is estimated that the economy will have a high growth with a probability of 25%, normal growth with a probability of 50% and a slow growth with a probability of 25%.

Retirement system

If the Social Security retirement system was a private retirement system, it would be declared bankrupt. Discuss why this is so and why the Social Security system can continue to pay benefits despite the fact that it can be considered bankrupt. Discuss why the Social Security tax rate has increased so much in recent years. What

Cost-benefit analysis to reduce air pollution in a city

How would you set up a cost-benefit analysis of a program to reduce air pollution in a city? Carefully indicate the items you would include, such as benefits and costs, and discuss the problems encountered in measuring these benefits and costs.

Calculate the minimum bid value in the given case.

A company has posted a request for bid on 230k cases of widgets per year over the next 5 years. Determine what bid price makes the most sense as a potential supplier. An Initial investment of 1 million is required to begin production. This investment will be depreciated using the straight line to zero method throughout the co

Walmart's Financial Health

I choose Walmart. Provide a financial summary of your selected company's financial health. Define 2 financial concepts and how they played a major part in the company's financial press. Based on your research of your company's financial health, describe the company's financial health.

Margin Call and Change in Settlement Value of Your Position

Your firm shorts 30 March 2009 Euro futures contracts with a future price of 1.510 for 5 days. Each contract has a $2100 initial margin and a $2100 maintenance margin. Each contact has a 125,000 Euro face value. For the next five days, the settlement prices of the March Euro contract are going to be 1.512, 1.514, 1.511, 1.509

Portfolio expected return and volatility

I need some guidance for the following scenario: You manage a portfolio that consists of 70 percent in S & P 500 index stocks and 30 percent in a Crude Oil ETF. Over the past 10 years the S & P 500 has had an average monthly return of 1.2 percent and a monthly return volatility of 2.2percent. Over the same period, crude oil h

Treasury STRIP

On February 18, 2008, a two-year Treasury STRIP (default free, zero-coupon note) sold for $98.5678 per hundred dollar of par value, while a four-year Treasury STRIP sold for $97.1264 per hundred dollar of par value. Assuming financial markets are perfect, you want to own $22M face value of 2-year Treasury STRIPs in two years an

Hedge Against Systematic Risk

I have an expected cash flow of $1,000 in one year. 1.2 is the beta for the common stock and 1.2 is also the beta of my cash flow. The risk-free rate is 4% and the market index has a 5% risk premium. How could I hedge against the systematic risk? What kind of strategy is needed? What is shorted, what is longed, and how much o

Coefficient of Variation, Risk and Return

Based on the following information, calculate the coefficient of variation and select the best investment based on the risk/reward relationship. Std Dev. Exp. Return Company A 7.4

President Obama and Federal Appropriations

- Identify three (3) areas where President Obama wants to increase federal appropriations. - Identify three (3) areas where President Obama wants to decrease federal appropriations. - Analyze and describe four (4) governmental expenditures each from the federal, state, and local budgets that will have a greater impact on the n

Financial Management: Risk and Return

1) Based on the following information calculate the holding period return: P0 = $10.00 P1 = $12.00 D1 = $1.22 2) Risk & Return and the CAPM. Based on the following information, calculate the required return based on the CAPM: Risk Free Rate = 3.5% Market Return =10% Beta = 1.08 3) Risk and Return, Coefficient of V

Financial Management: Edmund Enterprise

Edmund Enterprise recently made a large investment to upgrade its technology. Although these improvements won't have much of an impact on performance in the short run, they are expected to reduce future cost signeficantly. What impact will this have on Edmund Enterprise's earnings per share this year? What impact might this h