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Valuing Securities using Accounting Information

Financial intermediaries, Securities

Please help with the following multiple choice problems. 1) Without the participation of financial intermediaries in financial market transactions, a. information and transaction costs would be lower b. transaction costs would be higher but information costs would be unchanged c. information costs would be higher but t

Money Policy: Market Interest Rates

When the Fed purchases securities, the total funds of commercial banks ________ by the market value of securities purchased by the Fed. This activity initiated by the FOMC's policy directive is referred to as a ________ of money supply growth. a. increase; loosening b. decrease; tightening c. decrease; loosening d. inc

General journal entries for trading securities

XYZ Company has the following securities in its portfolio of trading equity securities on December 31, 2007: Cost Fair Value 5,000 shares of Nicky Corp., Common $155,000 $139,000 10,000 shares of Max Stores, Common 182,000 190,000 $337,000 $329,000 All of the securities had been purchased in 2007. In 2008, XYZ c

Industries of Selected Securities: Example Problems

I need some assistance on this assignment as do not know what industries these stocks are in. Identify the industries of your six selected securities, including bonds. 1. GE (General Electric) 2. Home Depot 3. Cisco Systems 4. Microsoft 5. Wal-Mart The selected bond issued by Santa Rosa, California Wastewater S

Constant Growth Model

Medtrans is a profitable firm that is not paying a dividend on its common stock. James Weber, an analyst for A.G. Edwards, believes that Medtrans will begin paying a $1.00 per share dividend in two years and that the dividend will increase 6% annually thereafter. Bret Kimes, one of James colleagues at the firm, is less optimis

Investment in Debt Securities at a Discount

On May 1, 2007, Gipson Corp. purchased $450,000 of 12% bonds, interest payable on January 1 and July 1, for $422,800 plus accrued interest. The bonds mature on January 1, 2013. Amortization is recorded when interest is received by the straight-line method (by months and round to the nearest dollar). Assume bonds are available fo

Securities Analysis: fundamental analysis

I have to answer the questions below in 250 words. I have been reading the chapter and don't fully understand this question. What is fundamental analysis? How does fundamental analysis impact your securities analysis?

Valuing Gold Reclaimed from Old Personal Computers

A number of industrial products include gold and silver as a component since they have very good conductive properties. The S&M Smelting Company engages in the recovery of gold from such products and is considering a contract to begin extracting the gold from the recycling of personal computers. The project involves contracting

Marketable securities

The Joe Elvis Company is currently holding $700,000 in cash. It projects that over the next year its cash outflows will exceed cash inflows by $360,000 per month. How much of the current cash holding should be retained, and how much should be used to increase the company's holdings of marketable securities? Each time these secur

How much cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50%? How high can the price of the stock go before you get a margin call if the maintenance margin is 30%? What will be your rate of return after 1 year if you close out your short position and the stock is selling at $25 ($35) per share?

Suppose you are bearish on Stock Y and decide to sell short 100 shares at the current market price of $30 per share. You earn no interest on the funds in your margin account and the cost of borrowing shares is 0.25%. a) How much cash or securities must you put into your brokerage account if the broker's initial margin require

SWIFT's implementation of the "smart card"

Question 1 SWIFT's implementation of the "smart card" is expected to a.decrease the likelihood of electronic fraud. b.remove the need for secret information to be sent through mail. c.guarantee the identity of the sender. d.all of the above Question 2 A Just-In-Time (JIT) inve

Adjusted Present Value Approach to Valuing Leveraged Buyouts

Please provide a detailed description on how to solve this problem (see attachment). The instructor supplied us with the answer, but not a step-by-step guide. I am arriving at a close approximation, but I'm not sure where I am going wrong. The text is Corporate Finace by Ross, Westerfield, Jaffe, 8th edition. Please see attac

Contemporary Financial Topics: What is the SEC?

I have to answer the questions below in 250 words. I have been reading the chapter and don't fully understand these questions. What is the SEC? Describe 2 ways that it impacts financial decision-making?

Assume that you have a short investment horizon (less than one year). You are considering two investments: a one-year Treasury security and a 20-year Treasury security. Which of the two investments would you view as being more risky?

Assume that you have a short investment horizon (less than one year). You are considering two investments: a one-year Treasury security and a 20-year Treasury security. Which of the two investments would you view as being more risky? Explain your answer 100 words or more "why do corporations and governments (local, stat

20 MCQ: investment income, trading securities, dividends, bonds, equities, market

1. Poster Inc. owns 35 percent of Elliott Corporation. During the calendar year 2003, Elliott had net earnings of $300,000 and paid dividends of $36,000. Poster mistakenly accounted for the investment in Elliott using the cost method rather than the equity method of accounting. What effect would this have on the investment accou

Valuing bonds

Finding the price of a 10 year pure discount bond paying $1000 at maturity if the YTM is 5%, 10% and 15% Also, the same company issued a bond with a par of $1000, time to maturity of 20 years, a coupon rate of 8% with semiannual payments. Please calculate the price of this bond if the YTM is 8%, 10% and 6%. Lastly, If the

Twenty-First Century

1. The Twenty-First Century closed-end fund has $350 million in securities, $8 million in liabilities, and 20 million shares outstanding. It trades at a 10 percent discount from net asset value (NAV). a. What is the net asset values (NAV) b. What is the current price of fund?

Greer Co: Available for sale securities

On December 29, 2005, Greer Co. sold an equity security that had been purchased on January 4, 2004. Greer owned no other equity securities. An unrealized holding loss was reported in the 2004 income statement. A realized gain was reported in the 2005 income statement. Was the equity security classified as

Short-term securities

1. If the Federal Reserve sells $40 billion of short-term U. S. Treasury securities to the public, other things held constant, what would be the most likely effect on short-term securities prices and interest rates? a. Prices and interest rates will both rise. b. Prices will rise and interest rates will decline.

Yield on two and three year treasury securities

The real risk free rate of interest is 3%. Inflation is expected to be 2% this year and 4 percent during the next two years. Assume that the maturity risk premium is zero. What is the yield on a two year treasury security? What is the yield on a 3 year treasury security?

Types of Sunken Costs

Which one of the following would be considered a sunk cost? a. Variable cost of materials to build a new product b. Additional insurance for a new product line c. The total amount paid to purchase investment securities last year; the securities have recently declined in value by 50% d. Expected annual maintenance costs for