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    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

    Finance

    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

    Would like someone to explain how to estimate stock price volatility and apply it to this question. Question: Suppose that observations on a stock price (in dollars) at the end of each of 15 consecutive weeks are as follows: 30.2, 32.0, 31.1, 30.1, 30.2, 30.3, 30.6, 33.0, 32.9, 33.0, 33.5, 33.5, 33.7, 33.5, 33.2 Estimate the stock price volatility. What is the standard error of your estimate

    Would like someone to explain how to estimate stock price volatility and apply it to this question. Question: Suppose that observations on a stock price (in dollars) at the end of each of 15 consecutive weeks are as follows: 30.2, 32.0, 31.1, 30.1, 30.2, 30.3, 30.6, 33.0, 32.9, 33.0, 33.5, 33.5, 33.7, 33.5, 33.2 Esti

    Finance Problems P1-1A, P1-2A, BYP1-4

    P1-1A. Barone's Repair Inc. was started on May 1. A summary of May transactions is presented below. 1. Stockholders invested $10,000 cash to start the repair company. 2. Purchased equipment for $5,000 cash. 3. Paid $400 cash for May office rent. 4. Paid $500 cash for supplies. 5. Incurred $250 of advertising costs in the

    Computing After-tax Returns

    Mr. Smith is in the 30% tax bracket. He earns $50,000 per year. What is his tax bracket after-tax income? 50000 x 0.60 = (1-0.40 = 0.60) 50000 x 0.60 = 30000.00 Mr. Smith has two investment opportunities: a. Megacorp, a for-profit healthcare company offering a bond at 8% b. Good Neighborcare, a not for profit h

    Evaluating Alternatives for Raising Funds

    ORNE Corporation plans to raise $2 million to pay off its existing short-term bank loan of $600,000 and to increase total assets by $1,400,000. The bank loan bears an interest rate of 10 percent. The company's president owns 57.5% percent of the 1,000,000 shares of common stock and wishes to maintain control of the company. Th

    Maloney's effective financing rate of borrowing dinar

    Maloney Manufacturing Company obtains a one-year loan of 2,000,000 Sudanese dinar (SDD) at an interest rate of 6%. At the time the loan is extended, the spot rate of the dinar is $.005. If the spot rate of the dinar at maturity of the loan is $.0035, what is the effective financing rate of borrowing dinar?

    What will be the financing cost for MNE's bonds

    An MNE issues ten-year bonds denominated in 500,000 Philippines pesos (PHP) at par. The bonds have a coupon rate of 15%. If the peso remains stable at its current level of $.025 over the lifetime of the bonds and if the MNE holds the bonds until maturity, the financing cost to the MNC will be: