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Differentiate liquidity management and capital management performed by a corporate treasury. Briefly discuss the business opportunities available to a bank treasury arising from these activities.
Sound cash management techniques would support
If his remaining life expectancy is twelve years, the prime interest rate is 8 percent, and he can ignore taxes, which should he choose? Would your answer be different if the prime interest rate wer
Another $100,000 portfolio currently yields $ 7,000 per year in income, but this amount is expected to grow at 4 percent annually. In about how many years will the two portfolios yield equal amounts
According to liquidity preference, what is the equilibrium interest rate?
Privacy protection has become an important public policy issue in the financial service industry. Why does this issue appear to be more important today than in the past?
Describe how each of the following terms could affect the availability and cost of financial services to the public:
Samuelson Plastics has 7.5 percent preferred stock outstanding. Currently, this stock has a market value per share of $52 and a book value per share of $38. What is the cost of preferred stock?
What is the percent increase for revenues which have grown from $150 (million) last year to $200 (million) this year. Show all steps.
Define an Arrow-Debreu security within a basic state-preference model with N securities and S states of nature. Under what conditions will markets be complete in such a setting?
What is the likely impact of the current Federal Reserve policy on the level of interest rates? Will it increase or decrease interest rates? What impact will this have on the value of existing bonds
A firm wishes to maintain an internal growth rate of 7% and a dividend payout ratio of 25%. The current profit margin is 5%, and the firm uses no external financing sources. What must total asset tu
A person wins $1 million in the state lottery. Actually, the person receives $50,000 per year every September 1st. Using a 10 percent discount rate and the bonds table, construct a cash-matched dedi
As the chair of the personnel committee, you are responsible for determining the initial amount to fund this retirement stipend. If your figures are correct, all succeeding annual budget amounts wil
Investors require a 16 percent return on the stock for the first three years, a 14 percent return for the next three years, and then an 11 percent return thereafter. What is the current share price
What if rates suddenly fall by 2% instead? What does this problem tell you about the interest rate risk of lower-coupon bonds?
The company uses a 10% interest rate on all of its projects. Calculate the MISS of the project using all 3 methods.
The projects are equally risky, and their cost of capital is 12%. You must make a recommendation, and you must base it on the modified IRR (MIRR). What is the MIRR of the better project.
Identify major factors that led to the dissolution of Enron Corporation® and WorldCom®. Explain specific ethical violations in accounting practices at Enron Corporation® and WorldCom®.
Calculate the bank discount rate of return (DR) and the YTM-equivalent return for the following money market instruments: Purchase price, $96; par value, $100; maturity, 90 days.
Suppose a 10-year bond is issued with an annual coupon rate of 8 percent when the market rate of interest is also 8 percent. If the market rate rises to 9 percent, what happens to the price of this
You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it's the company's policy to always maintain a constant growth rate in its
Why were returns on junk bonds less volatile than those on investment grade bonds over the period 1982-1984? Regardless of your view of the credit risk of Metromedia, should Anchor Savings invest in
Suppose that instead of deducting the interest owed up front, the company's lender agrees to extend the full $2.5 million and add the amount of interest owed to the face amount of CIBER's note. What
The exercise price on one of ORNE Corporation's put options is $30 and the price of the underlying stock is $25. The option will expire in 25 days. The option is currently selling for $5.50. Calcul