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Risk Averse Situation: Investing in an Economy

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

Interest, Annuity, Installment Loan, and Mortgage

1. Define simple interest and compound interest. Explain the difference between each. 2. Define annual percentage rate (APR). What effect does frequency of compounding have on the annual percentage yield (APY)? What condition would exist if the APR = APY? 3. What is an ordinary annuity? What is an annuity due? Which is mor

Financial Ratios for Sirius and XM Satellite Radio

IPrepare a summary comparing Sirius Satellite Radio and XM Satellite Radio's recent fiscal years statements based on the profitability ratios & efficiency levels. Discuss profitability ratios: choose 2 ratios within this category to discuss and relate to our company of choice. Discuss management efficiency ratios: choose 2

Dividend and Capital Gain Yield

Dividend and Capital Gain Yield A stock with a current price of $25 / share pays a current annual dividend of $2 which is expected to increase by 4% per year. What is the stock's capitalization rate?

Process oriented and cellular product oriented

Gearworks, Inc, manufactures parts for industrial machinery. The manufacturing process requires a variety of machines that grind, heat treat, and polish steel into various shapes. Three different product lines are produced using a traditional process-oriented plant layout as follows: A. Discuss the differences in traditional

Bottleneck identification and management at Perma-Clear Glass Company

Bottleneck identification and management at Perma-Clear Glass Company. Perma-clear Glass Company was founded in 1980 by Rob Samson and enjoyed rapid growth as demand for new construction materials exceeded supply. The company became efficient at converting large sheets of glass into various smaller dimensions demanded by resi

Expected price of Stock..

A stock just paid a dividend of 2.00$. Due to the introduction of a proprietary product, the dividend growth rate is expected to be 30% for the next two years, 15% for the years 3 and 4, and then return to a constant growth rate assumption of 4 percent thereafter. The required return on the stock is 18 percent. Calculate

California Clinics: What is the stock's value?

California Clinics, an investor-owned chain of ambulatory care clinics, just paid a dividend of $2 per share. The firm's dividend is expected to grow at a constant rate of 5% per year, and investors require a 15 % rate of return on the stock. 1. What is the stock's value? 2. Suppose the riskiness of the stock d

MAD, slope, intercept, regression equation, forecast

Using data in chart 6-11 calculate a moving average forecast for months 4 through 12 using weights of 3, 5,9 What is the MAD for this forecast? Using data in chart 6-11 calculate a 3-month moving average forecast for month 12. Time period actual rates $000 1 $445 2 478 3 525 4 660 5 570 6 600 7 632

Break-Even Analysis

Now, if Zebra's average cost (expenses) were $13.13 (per case) and the Distributors (wholesale) work on a 23% margin and the retailers work on a 20% margin; what would the income per case be for Zebra beer at the following three retails? Please check your answers to the following: 1. $4.99 per 6 pk.

Finance: What is the current market value of a share of RHM stock?

Assume RMH is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%?

Finance: Compute the cost of US bond

21. You buy $5,000 par value of U.S. government 10 1/4s09 bonds at a price of 99 seventy-three days into the interest period. If you pay a commission to your broker of $40, how much does the trade cost you, including accrued interest?

Assess personal goals for health, education, occupation and finances

1) I am a man trying to get muscular; please help me write about how I'm going to get in shape to be muscular in the next two years by working on my arms, legs and stomach. Remember I am male. How am I going to get muscular? What it takes with hard work? 2) I need permanent government job in the next 2 years. How am I going

Value of the preferred share

A firm issued a preferred stock which matures in 30 years and carries a maturity value of $45. The dividend is $4 per year over the 30 year period. The current market discount rate for this stock is 8%. What is the value of the preferred share?

Firm's Current Investment Opportunity

A firm's current investment opportunity schedule and the weighted marginal cost of capital schedule are shown below: Investment Opportunity IRR Initial Investment Schedule A 15% $200,000 B

Expected Return and Standard Deviation of Portfolio

Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 18% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What are the expected return and standard deviation of a portfolio invested 30% in Stock A and 70% in Stock B?

Boehm Incorporated: Value Per Share of company stock?

Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of the year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, r, is 15%. What is the value per share of the company's stock?

What is your estimate of the stock's current price?

5. A company currently pays a dividend of $2 per share, Do = $2. It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then the dividend will grow at a constant rate of 7% thereafter. The company's stock has a beta equal to 1.2, the risk-free rate is 7.5%, and the market risk pre

Determining a sunk cost

Which one of the following is an example of a sunk cost? 1. $1500 of lost sales because an item was out of stock 2. $1200 paid to repair a machine last year 3. $20000 project that must be forfeited if another project is accepted 4. $4500 reduction in current dress sales if a store starts selling coats 5. $1800 increase in


Here is a condensed version of your firm's balance sheet: Total Liabilities $30, 000, 000 Preferred Stock 10, 000, 000 Common Stock 60, 000, 000 Total Assets $100, 000, 000 Total Liabilities & Equity $100, 000, 000 If your firm's aftertax cost of debt is 6%, the cost of preferred stock is 10%, and the cost of com


Suppose the RiskFree Rate is 8%, the Expected Return this year on the S&P 500 stock market index is 13%, and the stock of Joe's Junkyard has a Beta of 1.4. Given these conditions what is the required rate of return for Joe's stock?