1. Which of the following factors does not contribute to dividend's effects on a firm's value. a. personal taxes b. corporate taxes c. transaction costs d. flotation costs 2. Which of the following policies is most likely to produce a zero dividend now and then? a. constant-dollar dividend policy b. constant-payout-
A convertible bond pays a 10% coupon, with semiannual payments, has a $1,000 face value, matures in 10 years, and is convertible into 40 shares of the firm's common stock. The stock is currently selling for $30 a share. If similar risk bonds are currently yielding 8%, what is the minimum price at which this bond should sell?
How can I use binomial model to answer to the following questions? Consider the stock with the current price of $20. It pays no dividends. 1) Maturity: in 4 months Strike price:$20 Volatility = 30% per annum Risk-free rate: 10% What's the value of European call option? 2) What would be the value of option in 1), i
C1. Value a one-year call option on a stock (Alpha PLC, Ltd.) whose current price is $35. In one year the stock will be worth either $42 or $29.75, and the riskless interest rate for the next year is (what else?) 10% The option's exercise price is $40. What is the option's payoff in the stock's "up" state? Why? What is the op
Fill in the blanks by choosing the appropriate term from the following list: lease, funded, floating-rate, eurobond, convertible, subordinated, call, sinking fund, prime rate,private placement, public issue, senior, unfunded, eurodollar rate, warrant, debentures, term loan. a. Debt maturing in more than 1 year is often cal
Briefly list fitteen courteous actions or statements that you consider to be essential. For example, "saying thank you."
Calculate optimal time to invest - Decompose the risk of each asset into market risk and firm specific risk - Calculate option payoff
1) Suppose you own a large forest that is due for harvest. The pulp market is picking up, so you know that if you start harvest this year you will forgo rising prices in the future. There is, however, a cost advantage to starting the harvest as soon as possible. The table below shows the present value of the revenue stream and t
A review of the accounting records at Corless Co. revealed the following information concerning the company's liabilities that were outstanding at December 31, 2002, and 2001, respectively. Debt (thousands) 2002 Year end interest rate 2001 Year end interest rate Short term debt:
There is a put option on the euro with an exercise price of $0.54/euro and it expires in three months and is trading at 1.55 cents per euro. The minimum contract size is euro 32,000. What would be the net payoff to the buyer and the seller of the put if the spot price at expiration is $0.71/euro, and what is the break-even rat
I have had this question reviewed by an online tutorial assistant and would like to have it checked over by somebody else. I believe that the answer is correct but would still like a second opinion to be sure. I appreciate all the help the OTA has given me so far but believe that it is always prudent to gain a second opinion. So
You are considering the purchase of a new car. The choices are: A. Pay $27,500 cash, or B. Pay $650 a month for 4 years, with an up-front service fee of $500, or C. Pay $750 a month for 3 years plus a balloon payment of $5,000. What are the implied interest rates in financing arrangements B and C?
Question 6 (Futures): Packers Inc. is a U.S. based manufacturer of cheese. The company considers expan¬ding its current operations by building a plant in the U.K. The CFO has presented the board with the following cash flow projections: Required initial outlay in U.S. dollars to be paid immediately is $600,000. The projected