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What is the maximum loss on a portfolio that is long one at-the-money put and one at-the-money call? a. $0.00 b. -$7.00 c. -$39.00 d. -infinity e. None of the above
1. What are the sources of cash inflows to a firm over any time frame?2. What are the sources of cash outflows from a firm over any time frame?3. Describe the three motives or reasons for holding ca
Using the key value driver formula, what is the enterprise value in each scenario? If each scenario is equally likely, what is the enterprise value for the company?
A bond's credit rating provides a guide to its risk. Long-term bonds rated Aa currently offer yields to maturity (YTM) of 4.3%. A-rated bonds sell at yields (YTM) of 3.6%. Assume a 10-year bond with
How much will they have to save each year for the next 50 years, in real dollars, to reach your retirement income goal? '
A firm has issued long-term bonds with a total market value of $50 million, and these bonds currently earn an expected return (rd) of 9 percent. Additionally, the company has 4 million shares of com
Calculate the present value of the depreciation tax shield for an asset in the 3-year class life costing $100,000. Three-year class percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively fo
What is the undiscounted cash flow in the final year of an investment, assuming $10,000 after-tax cash flows from operations, $1,000 from the sale of a fully depreciated machine, $2,000 required in
Touring Enterprices, Inc., has a capital structure of $18 million in long-term debt and $7 million in common equity. There is no preferred stock outstanding. The interest rate paid on the long-term
1.A 30-year, $1,000 par value bond has a 9.5% annual payment coupon. The bond currently sells for $875. If the yield to maturity remains at its current rate, what will the price be 9 years from now?
A futures price is currently 40 cents. It is expected to move up to 44 cents or down to 34 cents in the next six months. The risk-free interest rate is 6%. What is the value of a six month call opti
The price of a December put futures option is quoted as 5-52. Each Treasury bond futures contract is for delivery of $100,000 in Treasury bonds. What is the cost of one contract?
The risk-free rate is 5% and the dividend yield on an index is 2%. What is the delta with respect to the index of a one-year futures on the index?
A debt of $10,000 must be paid in a series of equal monthly payments for 5 years. The nominal annual interest rate is 12%, compounded monthly.
What are some of the common barriers to entry for a firm entering a new country for business? How does this vary from country to country?
The Basics of Capital Budget, Cash Flow Estimation and Risk Analysis
You are an analyst working in a single-product manufacturing firm. You have developed your firms cost structure below, based on an output level of 10 million units. Based upon your analysis, what is
Van Buren currently expects to pay a year end dividend of $2.00 a share. Van Buren's dividend is expected to grow at a constant rate of 5% a year and its beta is 0.9. What is the current price of Va
Ford's preferred stock pays a dividend of $3 each year and trades at a price of $27 per share. Ford's debt trades with a yield to maturity of 8.5%. What is Ford's weighted average cost of capital if
A portfolio comprises Coke (beta of 1.4) and Wal-mart (beta of 1.0). The amount invested in Coke is $10,000 and in Wal-mart is $20,000. What is beta of the portfolio?
Both companies have an operating tax rate of 25 percent and a cost of capital of 10 percent. What are the etnerprise-value-to-EBITA multiples for both companies? Does higher growth lead to a higher
what are operating profits and invested capital expected to be next year? What are two critical operating assumptions (identify one for profits, and one for capital) embedded in this forecast method
A colleague argues that this is too conservative, as SuperiorCo will create value well beyond the forecast period. What is the flaw in your colleague's arguement?
Imprudential, Inc., has an unfunded pension liability of $575 million that must be paid in 20years. To assess the value of the firm's stock, financial analysts want to discount this liability back t
Why are cash flows that are connected to common stock difficult to estimate? How does this compare to those related to bonds.