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Risk Adverse: Which Economy to Invest In

Consider the following two,completely separate,economies.The expected return and volatility of all stock in both economies is the same. In the the first economy, all stocks move together-in good times all prices rise together and in bad times they fall together.I n the second economy, stock returns are independent-one stock incr

Finance: Stock evaluation.

You expect the risk-free rate (RFR) to be 3 percent and the market return to be 8 percent. You also have the following information about three stocks. Stock Beta Current Price Expected Price Expected Dividend X 1.25 $ 20 $ 23 $ 1.25 Y 1.50 $ 27 $ 29 $ 0.25 Z 0.90 $ 35 $ 38 $ 1.00 a. What ar

Market Value and Hedge Positions Given Expected Market Drop

You are given the following information about a portfolio you are to manage. For the long-term you are bullish, but you think the market may fall over the next month. Portfolio Value: $1 million Portfolio's Beta: 0.86 Current S&P500 Value 990 Anticipated S&P500 915 a. If the anticipated market value m

Future contracts, parity and arbitrage

Assume a futures contract exists on Micromedia stock that expires in two months. Micromedia has a current market price of $200, has a beta of 1.15, a 0% dividend yield, and a standard deviation of .33. The current T-Bill rate is 5% annually. a. Determine what the parity relationship suggests the futures price should be?

enterprise value and share price

Heavy Metal Corp. is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF( $millions) 53 68 78 75 82 After then, the free cash flows are expected to grow at the industry average of 4% per year. Using the discounte

Flotation Costs and Issue Size: Shares to Be Issued

Your firm needs to raise $10 million. Assuming that flotation costs are expected to be $15 per share, and that the market price of the stock is $120, how many shares would have to be issued? What is the dollar size of the issue?

Annual Incremental Earnings

Daily Enterprises is purchasing a $10.5 million machine. It will cost $55,000 to transport and install the machine. The machine has a depreciable life of 5 years and will have no salvage value. The machine will generate incremental revenues of $4.3 million per year along with incremental costs of $1.5 million per year.

Finance Problem: Choosing a Bank

See the attachment. Assume that there are two banks in your area, Bank C and Bank NSC. Assume also that both are federally chartered banks, meaning that they are both subject to periodic examination and have their deposits insured by the FDIC. Also, assume that the deposit insurance coverage limit is $250,000. Both banks are su

When Should the Company Harvest the Forest?

Bunyan Lumber, LLC, harvests timber and delivers logs to timber mills for sale. The company was founded 70 years ago by Pete Bunyan. The current CEO is Paula Bunyan, the granddaughter of the founder. The company is currently evaluating a 7,500- acre forest it owns in Oregon. Paula has asked Steve Boles, the company's finance off

Scott Equipment Organization is investigating various combinations of short- and long-term debt in financing assets. Assume the organization has decided to employ $30 million in current assets and $35 million in fixed assets in its operations next year, provided the level of current assets, anticipated sales, and EBIT for next year are $60 million and $6 million, respectively. The organization's income tax rate is 40%. Stockholders' equity will be used to finance $40 million of assets, with the remainder financed by short- and long-term debt. The organization is considering implementing one of the policies in the diagram. Amount of Short-Term Debt Financial Policy Millions of dollars LTD (%) STD (%) Aggressive (large amount of short-term debt) $24 8.5 5.5 Moderate (moderate amount of short-term debt) $18 8.0 5.0 Conservative (small amount of short-term debt) $12 7.5 4.5 Determine the following for each policy: - Expected rate of return on stockholders' equity - Net working capital position - Current ratio Write a paper in which you evaluate profitability versus risk trade-offs of these policies. Would you rate them low, medium, or high with respect to profitability? Would you rate them low, medium, or high with respect to risk? Format your paper consistent with APA guidelines. *I am simply looking for solutions to finding the answers then I can write the paper myself... please help me.*

Scott Equipment Organization is investigating various combinations of short- and long-term debt in financing assets. Assume the organization has decided to employ $30 million in current assets and $35 million in fixed assets in its operations next year, provided the level of current assets, anticipated sales, and EBIT for next y

finance an expansion

The Thompson Corporation projects an increase in sales from $18 million to $25 million, but it needs an additional $500,000 of current assets to support this expansion. Thompson purchases under terms of 2/10, net 60 and currently pays on the 10th day, taking discounts. The CFO is considering using trade credit to finance the add

Finance Project: Process of Capital Budgeting & Decision Making

Five brief articles to reference are found on the "Headlines" page of the menu for GE on Yahoo! Finance. These articles were posted on Thursday, April 21, 2011 and Friday, April 22, 2011. Additionally, as you construct your answers, please reference not only General Electric (GE) but also Citigroup, Inc. (C), Koninklijke Philips

Finance Problems: Net Cost and Sales

1) Penn Steelworks is a distributor of cold-rolled steel products to the automobile industry. All of its sales are on a credit basis, net 30 days. Sales are evenly distributed over its 10 sales regions throughout the United States. Delinquent accounts are no problem. The company has recently undertaken an analysis aimed at impr

comparative analysis

How could one assess which organization in an industry was best managed from a financial standpoint? How could one use comparative analysis to perform a three-year trend analysis? If an organization was combined with one in a different industry segment, how could comparative analysis be used to estimate its performance?

NASDAQ and NYSE: How the two exchanges operate, similarities and differences

You have been asked to write a report for a group of new stock brokers about the NYSE-Euronext and the NASDAQ. Visit both the NYSE Homepage, and the NASDAQ Homepage, and write a paper on how the two exchanges operate. Make sure to address the following three questions: - How are NYSE and NASDAQ similar, if at all? - How

issues in finance

SQ20-3 What are the essential characteristics of common stock? SQ20-14 What is the random walk hypothesis? Does research evidence tend to support or deny the validity of this hypothesis? SQ21-9 Discuss the factors that influence the volume of borrowing by individuals and families. What role do you believe inflation play

Problem 15-12A Finance 370

15-12A. (Break-even point) You are a hard-working analyst in the office of financial operations for a manufacturing firm that produces a single product. You have developed the following cost structure information for this company. All of it pertains to an output level of 10 million units. Using this information, find the break-

Stock analysis for a company

Assume that a company's stock is currently priced at $24.50, its last dividend was $1.55, and you think that the company is capable of 8% growth indefinitely. If you require a 15% return, at what price would you be willing to buy this stock?

Personal Financial Management

13.1 Ray's Dilemma: Common Stocks or Mutual Funds? Ray Sutton has worked in the management services division of Strategic Consultants for the past 5 years. He currently earns a n annual salary of about %95,000. At 33, he's still a bachelor and has accumulated about $60,000 in savings over the past few years. He keeps his sa

Payable Shareholders of Record Stock Dividends

Instructions: You will complete each of the following problems using Microsoft Excel. In Excel, create a tab for each problem. Solve each problem on the excel tab in a professional manner (make sure your solution is clear and neatly organized). Problem One (Chapter 10): On January 1, 2011, the Seikely-Anderson Company sign

financial statement fraud exposure areas

Please help with the following problem. Provide at least 200 words and include references. What are the four different exposure areas that must be examined while detecting financial statement fraud? Provide a detailed answer.