Finance questions and answers in November 2021

Avicorp has a $10.7 million debt issue​ outstanding, with a 6.1% coupon rate. The debt has​ semi-annual coupons, the next coupon is due in six​ months, and the debt matures in five years. It is ...
The market risk premium for FCIB is 9 percent, and has a tax rate of 35 percent. The risk-free rate of interest is 5%. Willow-Woods Inc. has a capital structure comprised of the following:   8,500...
Vitality Vancouver Inc. (VVI) has recently raised debt capital through long-term financing. The bond indenture includes issuing 8% coupon bonds on the market that are selling at $989, pay interest sem...
1. Diversification cannot reduce the portfolio risk if you invest different stocks in the same industry.    . Diversification reduces the portfolio risk if you invest different stocks in the differe...
1) Tony's son, Mark will start college in 7 years. Tuition costs $23,000 today, increasing at an annual rate of 3.6%. Tony wants to earn 11.8% annually on his investments. If he makes an initial inves...
1)Ayeza thinks of investing $10,000 a year in real terms into her investment account for the next four years. The relevant nominal discount rate is 7.5% and the inflation rate is 4.2%. Calculate the r...
Armor Investment Company is considering the acquisition of a heavily depreciated building on 10 acres of land. It expects to rent the building as a storage facility and expects to collect cash flows e...
How do taxes influence the WACC? Does the WACC increase when taxes increase? What element on the balance sheet of companies is mainly affected by tax changes (either rising or falling)? Might rising t...
Explain what matters most historically when it comes to returns and current interest rates? Why does that influence stock returns? This discussion must include some discussion of the earnings yield of...
Elaborate on the difference between the P/E ratio and the EV/EBITA (or EV/EBIT) ratio. Discuss what matters most for equity owners and why (still) focusing on the P/E ratio might not provide a clear e...
When looking at company valuation compared to the bond market, how could varying interest rates influence your choice of buying (stable) stocks vs. bonds? Include in your discussion how changing inter...
Vitality Vancouver Inc. (VVI) has recently raised debt capital through long-term financing. The bond indenture includes issuing 8% coupon bonds on the market that are selling at $989, pay interest sem...
Which statement is not true regarding the Capital Market Line (CML)? a.The CML always has a positive slope.     b.The CML is also called the security market line.     c.The CML is the line from th...
Vitality Vancouver Inc. (VVI) has recently raised debt capital through long-term financing. The bond indenture includes issuing 8% coupon bonds on the market that are selling at $989, pay interest sem...
please help me answer this question. Suppose you are the owner of a company, which generates a free cash flow of $0.6 million per year in perpetuity. Suppose the current one-year risk-free interest ra...
please help me answer this question. Wolfcorp has a plant that can generate a cash flow of $3 million annually. Because of a new regulation that the government will announce shortly, the cash flow nex...
please help me answer this question. Bluestar, a U.S. company, is considering a new project in Japan. The following expected free cash flows measured in Japanese yen are assumed to be uncorrelated wit...
please help me answer this question. You founded your firm in 2019. In 2020, you sold 3 million shares to a venture capitalist, with a price of $11 per share. After this transaction, your company has ...
  please help me answer this question. PointBiotech is considering starting a new project in Melbourne. The management team expects the following free cash flows from this new project. Year 0 1 2 3 4...
please help me answer this question. To extend PumpkinCorp's business to Melbourne, the manager of PumpkinCorp is considering acquiring RedCorp, a firm located in Melbourne. PumpkinCorp has 10 million...
please help me answer this question  . The following is the balance sheet for Cavernetworks (in thousands of dollars): Assets Liabilities Cash $600 Debt $300 Property, Plant, and Equipment $3960 Equi...
Manning services floats a bond in the market a 6.5% coupon bond with annual payments. The bond stipulates that the yield to maturity is 6.71% and the maturity date is 7 years from today. Calculate the...
1. Manvester Steliing Inc. has a semiannual, 12-year bonds which is selling at par and have an effective annual yield of 4.6529%. What is the amount of each interest payment if the face value of the b...
finance56 finance this  a is a complete question kindly solve showing all the working   AT&T Mobility, LLC, will pay $60 million to settle litigation with the Federal Trade Commission over alleg...
 . Suppose BSA Corporation projected to generate the following for the next five years, in million pesos: Operating Year Revenue Expense Taxes (excluding depreciation 50.00 30.00 6.00 2 65.00 33.00 6...
5) In the context of asset pricing, the finance literature implies that an investor will be indifferent between two bonds which shows equal yields to maturity if they are of similar default risk. What...
1)Ayeza thinks of investing $10,000 a year in real terms into her investment account for the next four years. The relevant nominal discount rate is 7.5% and the inflation rate is 4.2%. Calculate the r...
finance56 finance this  a is a complete question kindly solve showing all the working   AT&T Mobility, LLC, will pay $60 million to settle litigation with the Federal Trade Commission over alleg...
 . Use the following information for numbers 17 to 22: Compute for the missing figures using CAPM: C Corp A Corp P Corp M Corp Risk free rate 17. ? 3% 4% 5% Beta 1.25 18. ? 1.30 1.40 Market return 12...
An investor is considering the purchase of a small office building. The NOI is expected to be the following: Year 1, $232,000; Year 2, $242,000; Year 3, $252,000; Year 4, $262,000; Year 5, $272,000. T...
A stock is trading at $50, an at-the-money put with 3 months to expiration is trading at $3, and the present value of the exercise price is $49.  What is the value of a fiduciary call position with t...
A call is worth $9, the continuously compounded risk-free rate is 5%, the futures price is $95, the exercise price is $100, and the expiration is 9 months. Based on these data, the arbitrage-free pric...
In 90 days, a company will have to borrow $5 million for 180 days and they are concerned that interest rates may rise leading to increased interest expense.  They decide to hedge with a 3 x 9 FRA. Cu...
If the spot exchange rate on the Hong Kong dollar (HKD) in Japanese yen (JPY) is 14 JPY/HKD (JPY per 1 HKD). The Hong King risk free rate is 0.75% and the Japanese risk-free rate is 0.50%. What is the...
You enter a 2-year pay-fixed receive-floating interest rate swap with semi-annual payments on a notional principal of $20 million and the current term structure of interest rates is below based on a 3...
businesss questions Case study based Individual coursework to meet learning outcomes LO2 and LO3 The following case study will give students the opportunity to examine the range of potential threats, ...
MULTIPLE CHOICE Q HELP  Pinder Ltd is considering buying the patent rights to a recently developed drug to treat eczema for $30.0 million. There is only 2 years left on the life of the patent, after ...
Pinder Ltd currently has 5 million shares outstanding that are trading at $18 per share. Due to some unforeseen problems, Pinder Ltd needs quick access to capital and decides to raise $1 million placi...
(MULTIPLE CHOICE, 1 ANSWER) Prior to TD 2004/22, Pinder Ltd announces an off-market buyback to its shareholders at $15 per share. Of the $15, $10 was a fully franked dividend and the capital component...
(MULTIPLE CHOICE, 1 ANSWER) Pinder Ltd is considering buying the patent rights to a recently developed drug to treat eczema for $30.0 million. There is only 2 years left on the life of the patent, aft...
Pinder Ltd is considering building a solar power plant. The solar power plant will cost $10.3 million immediately, and will take 1 year to build. If there is high demand for electricity, the solar pow...
In a free floating exchange rate regime, the demand and supply for a currency determine its price. For each of the following conditions, explain what is expected to happen to the demand and supply cur...
our company needs to borrow $5 million in three months' time for a period of 6 months (180 days). You are concerned that the changes in interest rates will be unfavourable. You approach an FRA dealer,...
Company AA and company BB each need $1 million in funds and are quoted the following rates in the fixed and floating markets. AA agrees to borrow at the fixed-rate and BB agrees to borrow at the float...
Company AA and company BB each need $1 million in funds and are quoted the following rates in the fixed and floating markets. AA agrees to borrow at the fixed-rate and BB agrees to borrow at the float...
Your company needs to borrow $5 million in three months' time for a period of 6 months (180 days). You are concerned that the changes in interest rates will be unfavourable. You approach an FRA dealer...
Deposit taking institutions are subject to capital adequacy standards imposed by APRA (Australian Prudential Regulation Authority). Required: a)    Explain the purpose of the capital adequacy requir...
Your company needs to borrow $5 million in three months' time for a period of 6 months (180 days). You are concerned that the changes in interest rates will be unfavourable. You approach an FRA dealer...
Company AA and company BB each need $1 million in funds and are quoted the following rates in the fixed and floating markets. AA agrees to borrow at the fixed-rate and BB agrees to borrow at the float...
Suppose you evaluating an investment manager. Manager A has achieved a  historical return of 20% per year with a beta (with respect to a benchmark) of 1.4, and  volatility of 40%. Manager B has achi...
Monetary Policy Statement On 20 January 2006, at its first meeting for the year 2006, Bank Negara Malaysia's Monetary Policy Committee (MPC) decided to leave the Overnight Policy Rate (OPR) unchanged ...
Question 4 The price of IBA stock is $101. It will either increase by $10.2 or decrease by $8.5 at the end of month 1. If the price is up in the first month, it will either increase by $16.1 or decrea...
Round to 4 decimal places  Question 1 GoGo Inc. plans to issue a perpetual callable bond that pays 11.4% annual coupons. The current interest rate is 8%. Two years later, there is 15% probability tha...
A conceptual difference between the Black-Scholes-Merton model and the binomial model is that the former is based on replication whereas the latter is based on risk neutral valuation. Ture or False, P...
A car dealership offers your client no money down on a new car. Your client may pay for the car for 3 years by equal monthly end-of-the-month payments of $376 each, with the first payment to be made o...
Question 1 (20 marks)   One of the fixed-income portfolio managers is considering purchasing a three-year 6% annual coupon paying bond. Please use this information to answer parts A and B.   a. Usin...
16. Please refer to the following screen shot. Kyle is modeling potential umbrella sales in his store in the next 10 days. He believes sales would be 100 umbrellas if it is a rainy day, and only 30 if...