a) Borrow $10,200 from the First National Bank at a fixed rate of 12% per annum, simple interest. The loan would be repaid in equal monthly installments over a 3-yar (36 months) period. b) Obtain a $10,200 installment loan requiring 36 monthly payments from the Store Manager's Credit Union at a 6.5% stated rate of interest.
Returns and the Bell Curve An investment has an expected return of 8 percent per year with a standard deviation of 4 percent. Assuming that the returns on this investment are at least roughly normally distributed, how frequently do you expect to lose money? Using Returns Distributions Based on the historical record, if
1..Return Calculations A particular stock had a return last year of 4 percent. However, you look at the stock price and notice that it actually didnâ??t change at all last year. How is this possible? 2.Returns Distributions What is the probability that the return on small stocks will be less than 100 percent in a sin
A firm wishes to assess the impact of changes in the market return on an assess that has a beta of 1.20 a. If the market return increased by 15%, what impact would this change be expected to have on the asset's return? b. If the market return decreased by 8%, what impact would this change be expected to have on the asset's ret
Mike is searching for a stock to include in his current stock portfolio. He is interested in Apple Inc.; he has been impressed with the company's computer products and believes Apple is an innovative market player. However, Mike realizes that any time you consider a so-called high-tech stock, risk is major concern. The rule he f
Using the data below, suppose you are holding a market portfolio, and have invested $12000 in stock C. a) How much have you invested in stock A? b) How many shares of B do you hold? c) If the price of Stock C suddenly drops to $4 per share, what trades would you need to make to maintain a market portfolio? Stock Price/Shar
2-41 Gross Margin and Contribution Margin Income Statements Tosca Beverages Reports the following information for July: Units produced and sold 18,800.00 Per unit revenue and costs: Sales revenue $3.20 Direct material costs 0.20 Direct labor costs 0.16 Variable manufacturing overhead 0.06 Fixe
How would you weigh risk against return? Is there a point when return makes risk invalid?
What are the main products traded between Jamaica and the U.S.? What do you think are the major issues involved in financing trade between Jamaica and the U.S.?
Rock is sold to contractors who use the product in construction projects. Needs to increase sales by advertising. Spend $100,000 advertising campaign. currently sells 25,000 tons for a total revenue of $5,000,000. Direct Labor...............$1,500,000 Variable production overhead...........200,000 fixed production overhead..
E10-8 Jerry Grant, the new controller of Blackburn Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2008. His findings are as follows. Accumulated Useful Life Type Date Depreciation in Years Salvage Value of Asset Acquired Cost 1/1/08 Old Pr
Rem Inc. produces electronic components for sale to manufacturers of radios, television sets, and digital sound systems. In connection with her examination of Rem's financial statements for the year ended December 31, 2007, Maggie Zeen, CPA, completed field work 2 weeks ago. Ms. Zeen now is evaluating the significance of the fol
If you were in a position to remake the financial world: Why would or wouldn't you have the bondholders' claim be protected to the possible detriment of the shareholders' claim?
In an article about the financial problems of USA Today, Newsweek reported that the paper was losing about $20 million a year. A Wall Street analyst said that the paper should raise its price from 50 cents to 75 cents, which he estimated would bring in an additional $65 million a year. The paper's publisher rejected the idea, s
#39 You are currently only invested in the Natasha Fund (aside from risk-free securities).It has an expected return of 14% with a volatility of 20%. Currently, the risk-free rate of interest is 3.8%. Your broker suggests that you add Hannah Corporation to your portfolio. Hannah Corporation has an expected return of 20%, a volat
Key elements identified in the article: 1. Numbers play a significant role in a person's daily life whether they realize it or not. 2. In comparison to organizational operations management, people are inclined to manage their personal lives in accordance with systematic maintenance of record keeping. Although most peop
Its investment bankers have told Donner Corporation that it can issue a 25-year, 8.1% annual payment bond at par. They also stated that the company can sell an issue of annual payment preferred stock to corporate investors who are in the 40% tax bracket. The corporate investors require an after-tax return on the preferred that
1. You have been hired as the CFO of a new company and are determining the company's accounting needs. - Explain to your staff at least 2 ways in which accounting data are used to make business decisions. - Explain at least three related accounting terms or theories. 2. You are an accountant at a local CPA firm tha
Compare and contrast at least two risk management tools and techniques from forward contracts.
Read the following three sample business plans: Ice Dreams http://www.bplans.com/shaved_ice_beverage_business_plan/executive_summary_fc.cfm R J Wagner & Associates Realty http://www.bplans.com/real_estate_brokerage_business_plan/executive_summary_fc.cfm Interstate Travel Center http://www.bplans.com/truck_stop_busine
1. Common stockholder/Prospective owner: a. Indicate whether or not you would purchase the stock of this company at a current market price of $24 per share. b. Justify your decision using at least three reasons that are based upon the ratios you calculated. 2. Common stockholder/Current owner: a. Indicate whether or
See attached files. Determine the year-to-year percentage annual growth in total net sales. Based only on your answers to question #1, do you think the company achieved its sales goal of +10% annual revenue growth in 2009? Determine the target revenue figure, and explain why you do or do not feel that the company hit its t
Baxter Video Product's sales are expected to increase by 29% from $5 million in 2010 to $6 million in 2011. It's assets totaled $3 million at the end of 2010. Baxter is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2010, current liabilities were $1 million, consisting of $25
See attached file. I know a risk-adverse investor would choose the economy in which stock returns are independent because this risk can be diversified away in large portfolio. I need a bit more explanation in a brief.
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
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
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
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?
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
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?