Finance questions and answers in March 2021

Chris and Karen are married and own a three-bedroom home in a large Midwestern city. Their son, Christian attends college away from home and lives in a fraternity house. Their daughter, Kelly, is a se...

A two-step binomial tree is used to value an American put option on one share of ABC stock. The strike price is $150 and the expiration date is in 6 months. Each step is 3 months. Today's spot price o...

The current price of a non-dividend-paying stock is $175. Over the next year it is expected to rise to $215 or fall to $130. Assume the risk free rate is 3%. An investor buys a call option with a stri...

A trader creates a short straddle using put and call options with a strike price of $200 per share by trading a total of 20 option contracts (short 10 put contracts and short 10 call contracts). Each ...

A trader creates a bull spread using put options with strike prices of $160, and $180 per share by trading a total of 40 option contracts (20 short 180-strike put contracts and 20 long 160-strike put ...

The price of a European put that expires in one year and has a strike price of $210 is $15. The underlying stock price is $203 and the stock does not pay any dividend. The risk free rate is 5%. a) Wha...

1. Assume that the stock price is $100 per share and that the stock does not pay any dividend. The options are one-year European options and the exercise price of these options is $100 per share. The ...

Treble Inc. planned and manufactured 251,000 units of its single product in 2019, its first year of operations. Variable manufacturing costs were $32 per unit of production. Planned and actual fixed m...

Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms × $12/kilogram) ...

29. If China were to move to a fully convertible currency, ending currency sterilization, and assuming no change in the Current Account or Capital/Financial Accounts of the Balance of Payments, which ...

What is the risk if a US corporation takes out a five year fixed rate loan in a low interest foreign currency and turns it into US$ without hedging If the foreign currency strengthens too much If the ...

21. Assume Broward General Hospital (BGH) issued bonds with a ten-year maturity, a 12% coupon rate with an annual payment, and a $1,000 par value. I apologize but the question was incomplete. I failed...

Garvin Enterprises is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? CF Initial investment (960.00) Cash flow-yr-1 ...

you are the new CEO of Triangle Pediatrics, and two weeks after you started in your new position, the Chief Financial Officer and Associate PV of Finance left for greener pasture. The parent of one of...

Yasmine took a great course in Personal Finance at Concordia where she learned about the Pay Yourself First Method. She has decided to apply this as of her first pay where she landed a fantastic job a...

Which of the following is NOT correct about the description of growing perpetuity? The cash flow amount is constant every period. The present value is finite if the growth rate is less than the discou...

An annuity is defined as cash flows growing at a constant rate every period for a finite number of periods. cash flows growing at a constant rate forever. equal dollar amount of cash flows every perio...

Suppose you will receive annual payments of $700 forever. The first payment will be made 4 years from now. If the interest rate is 20% per year, what is the present value (@ t=0) of this stream of pay...

You just landed a job that will start next year (i.e. year 1). They are offering a starting salary of $60,000 (next year). You expect the salary to grow by 2% every year until you retire. You plan to...

The Lo Sun Corporation offers a 6% coupon rate bond with a current market price of $874.2. The yield to maturity is 7.35%. The par value is $1,000. Coupon is paid semiannually. How many years is it un...

Panther Corp. stock is trading at $18.53. The firm pays annual dividends which increase at a constant rate. The last dividend paid was $1.32 a share. If the required return on the stock is 14%, what i...

ABC Corp. has expected dividend of $5 per share for next year. The firm's ROE is 15% and its dividend payout ratio is 60%. Assume a discount rate of 10%. What is the present value of its growth opport...

What is the argument for using sector-specific multiples? Question 4 options: Sector-specific multiples allow use to tie value to something critical (and unique) to a sector. Sector-specific multiples...

How do stock buybacks affect the price to book ratios? Question 2 options: Stock buybacks reduce the book equity disproportionately Price to book ratios increase after stock buybacks Both A and B Neit...

Question Triangular Chemicals has total assets of $91 million, a return on equity of 39 percent, a net profit margin of 5.4 percent, and an equity multiplier of 2.84. How much are the fir...

(Liquidity Analysis) The King Carpet Company has $3,180,000 in cash and a total of $11,030,000 in current assets. The firm's current liabilities equal $5,510,000 such that the firm's ...

(Related to Checkpoint 4.3) (Profitability analysis) Last year the P. M. Postem Corporation had sales of $434,000, with a cost of goods sold of $114,000. The firm's operating ...

Jimmy has a bond with a $1,000 face value and a coupon rate of 9.5% paid semiannually. It has a five-year life. a) If investors are willing to accept a 14 percent rate of return on bonds of ...

Co. wants to issue new 19- year bonds for some necessary expansion projects. the company currently has 8.2% coupon on the market that sell at 1148.09, make semiannual payments, and mature in 19 years....

The CFO is proposing that her company issues debt to repurchase shares, because the company's current leverage ratio is only 10% and the CFO believes that increasing leverage will increase company val...

Angola Superheros, Inc. is considering launching a production of a new superhero toy. The production and sales are expected to last 4 years. The project would require a new machine, with a cost of $1,...

Please help me to answer this with Excel XIRR: Discount rate: 12% Assume the following cash flows on the specified date: 1/2/2013 $ (1,000.00) 9/19/2013 $ 250.00 1/2/2014 $ 250.00 1/2/...

Please help to fill the blank with your answer, thank you so much: ------------------- measures the movement of one stock against the movement of another stock over time and takes into account...

Please help to fill the yellow highlighted cell with your answer, thank you so much: The ratio is another measure of the risk adjusted returns of a security. Ely dividing the excess security.r return ...

Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 7% (annual coupon payments) and a face value of $1000. Andrew believes it can get a rating of A from Standard and Poor's...

Are the following statements true or false. Briefly explain why? 1. Company X is a profitable company that has been downsizing in the most recent year 2. As is typical of public firms in the US, Compa...

A machine costs $300 today (year 0). Assume this investment is fully tax-deductible, as stipulated by the new US corporate tax code of 2018. ?...

The balance sheet and income statement for the J. P. Robard Mfg. Company are as follows: . Calculate the following ratios: Current ratio Times interest earned Inventory turnover Total asset...

1. Ms. Miller is 25 years of age as of today. She wants to retire at age 65 and wants to save equal amounts annually over next forty years so that she can have annual income of $80,000 from t...

Financial Statement Analysis Required : Refer to Tesla, Inc.'s 2019 Form 10K and specifically item 8, Financial Statements and Supplementary Data, which is included in the fina...

1) Which is false under the Home Buyer's Plan (HBP)? I. If you withdraw $20,000 for a down payment on your first home, your minimum repayment would be $1,333.33 into yo...

1. First Safe Interstate Bank is a small, regional bank that is trading at a price to book (equity) ratio of 1.50. The bank is in stable growth, with earnings and dividends expected to grow 3% a year ...

(based on Chapter 9) A new machine will cost $250,000. The expected market value of the machine at the end of each year, and the annual maintenance costs are given in the table below. Assuming 11% cos...

Angola United Theaters, Inc. is considering opening a new movie theater in Angola, Indiana. The relevant cost of capital is 8%. The purchase, renovation, and modification of a downtown building would ...

The city of Angola, Indiana is considering building a snowmobile trail on the land owned by the city. The life of the project is assumed to be 20 years. Building the trail would require an investment ...

Sandra stopped working, and stopped contributing to the Canada Pension Plan, on her 65th birthday. At age 65, she applied for and began to receive her CPP retirement income. Her birthday falls on July...

Please help me to choose one of these answers: Which is false under the Home Buyer's Plan (HBP)? I. If you withdraw $20,000 for a down payment on your first home, your min...

1. An $8000 demand loan at a fixed rate of 10.5% was advanced on May 10. A payment of $2000 was made on July 15 and a final payment was made on Sept. 5. What was the size of the final payment? 2. A ho...