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Systematic and Unsystematic Risks

I need to know whether each of the following is mostly a systematic or unsystematic risk factor. a. Bernie Ebbers resigns unexpectedly as CEO of MCI Corporation b. Disney receives an unsolicited bid from General Electric. c. The United States reports an unexpected increase in the consumer confidence index level. d. Apple

How Much Should You Pay to Purchase Each Share of Stock?

Michelak's Maritime Industries has relatively stable earnings and pays an annual dividend of $2.50 per share. This dividend has remained constant over the past few years and is expected to remain constant for some time to come. If you want to earn 12% on an investment in the common stock of Michelak's, how much should you pay to

financial function positions and activity in organization

As an example take a look at the company or organization you work in and identify those people whose jobs involve a financial function. Describe those positions and the activity and discuss how vital the activity is to the organization. How could knowledge of financial maters, processes, and rules help a person involved in co

Financial Management of U.S. Companies

Which of the following statements is true regarding the goal of financial management? A U.S. company considering international operations will have a different goal than a company that only conducts operations in the U.S. The firm's structure (i.e. corporation, sole proprietorship, partnership) is not relevant to

Prior period adjustments/preferred stock

1. Prior period adjustments are reported in the: income statement. balance sheet. statement of retained earnings. statement of cash flows. 2. Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as: Participating prefe

Current price and holding period

How would the price of a share of stock vary with the time an investor prefers to hold the stock? That is, suppose you have a planned holding period of 3 years and someone else has a planned holding period of 5 years. How would that affect the current price of the stock? Explain.

Abnormal rates of return

Problem1: Compute the abnormal rates of return for the following stocks during period t (ignore differential systematic risk): Stock Rit Rmt B 11.5%

Choosing a Loan

You are enrolling in an MBA program. To pay your tuition, you can either take out a standard student loan (so the interest payments are not tax deductible) with an EAR of 5 ½ % or you can use a tax-deductible home equity loan with an APR (monthly) of 6%. You anticipate being in a very low tax bracket, so your tax rate will be

Starting Your Own Business

What risks are there when starting your own business? What obstacles are there to raising capital for a new venture? Discuss the business plan as a vehicle for raising capital. Given the difficulties of accurately predicting the future, is a business plan useful?

Portfolio and characteristic line

Which one is right and why? (explain in one sentence) A portfolio is: a). a group of assets, such as stocks and bonds, held as a collective unit by an investor. b). the expected return on a risky asset. c). the expected return on a collection of risky assets. d). the variance of returns for

Oakton River Bridge Case Study (Integer Programing Model)

Oakton River Bridge Case study The Oakton River had long been considered an impediment to the development of a certain medium sized metropolitan area in the southeast. Lying to the east of the city, the river made it difficult for people living on its faster bank to commute to jobs in and around the city and to take advantage

Finance Allocation

Assume that $2 mil of Financial Services are related to billing and managerial reporting and $1 mil are related to payroll and personnel management activities. a. Devise and implement a cost allocation scheme that recognizes that Financial Services has two widely different functions? b. Is there any additional information

Finance: Cost Allocation for St. Mary's Hospital

Assume that the hospital uses salary dollar as the cost driver for the General Administration, housekeeping labor hours as the cost driver for Facilities, and patient services revenue as the cost driver for Financial Services. (The majority of the costs of the Facilities Department are devoted to housekeeping services) a. Wha


St Mary's Hospital has three support departments and four patient services departments. The direct cost to each of the support departments is as follows: General Administration $2,000,000 Facilities: $5,000,000 Financial Services: $3,000,000 1. Assume the hospital uses the direct method for cost allocation. Furthermor

Expected Return on Investment

The expected return for an investment is 30%. If we know the following information about the return distribution of the investment, what return will the investment produce if the economic climate is average? Climate Return Probability Poor 20% 0.30 Average

Finance Beta Calculations

Please calculate the beta and dividend payout ratio of a company with a stock price of $87.00, a dividend payment of $7.10 every year, increasing for the last 10 years, at a growth rate of 6%, while the current market rate of return stands at 13.19%, and an ROE or (cost of equity capital) of 15.37%. Risk-free investments are ret

Finance: Practice exam questions

1. The primary users of external financial reports are a. Those who direct day to day operations of a business enterprise b. Individuals who have an economic interest in the firm but who are not part of management c. Managers of an enterprise who plan, implement plans, and control costs d. None of the above

Nelson's Margin Call: Stock Decline and Margin Call

Nelson purchased 1,300 shares of stock for $12.75 a share. The initial margin requirement is 70 percent and the maintenance margin is 40 percent. What is the maximum percent by which the stock price can decline before he receives a margin call?

Tall Pines Stock Short Sales

Matt short sold 500 shares of Tall Pines stock at $19 a share at an initial margin of 65 percent. The maintenance margin is 35 percent. What is the highest the stock price can go before he receives a margin call?

Margin Position in a Stock After a Short Sale

Recently, you sold 1,000 shares of stock for $21,400. The sale was a short sale with an initial margin requirement of 60 percent. The maintenance margin is 30 percent. The stock is currently trading at $27.50 a share. What is your current margin position in this stock?

Impact on profit of increase in price

See attached file. 'If prices are, on average, increased by 1%, how much can volume drop before net profits will be less than $10,000?' I am looking for the answer to the question in the middle of the page with an arrow and question mark in front of it. I already came up with an answer, but not sure if its correct.

Long-term growth of the company

Your company needs $350,000 next year to finance several projects for the long-term growth of the company and increasing shareholder value. How would you raise the $350 million needed to fund long-term growth of the company?

Investment Analysis

You have $40,000 to invest on Sophie Shoes, a stock selling for $80 a share. The intial margin requirement is 60 percent. Ignoring taxes and commissions, show in detail the impact on you rate of return if the stock rises to $100 a share and if its declines to $40 a share assuming: (a) you pay cash for the stock and (b) you buy i