In: Economics
You decide to open a margin account with your broker. You deposit $20,000 in your account. In addition, you borrow $20,000 from your broker and purchase 400 shares of XYZ corporation at $100 per share. As soon as you buy the stock, it drops to $90 per share.
A) What is your margin rate after the stock price drop to $90 per share?
B) If the stock drops further to $80 per share, how much money will you need to deposit in your account to bring the margin rate up to 40%?
In: Finance
treasury notes and bonds. Use the information in the following table:
Assume a $100,000 par value. What is the yield to maturity of the August 2002 Treasury bond with semiannual payment? Compare the yield to maturity and the current yield. How do you explain this relationship? What is the yield to maturity of the August 2002 Treasury bond?
Today is February 15, 2008 | |||||||
Type | Issue Date | Price (per $100 parvalue) | Coupon Rate | Maturity Date | YTM. | Current Yield | Rating |
Bond | Aug 2002 | 78.03 | 3.00% | 8-15-2012 | – | 3.845% | AAA |
In: Finance
Which bond will most likely experience the greatest percentage change in price if the market discount rates for all three bonds increase by 100 basis points?
The following information relates to Questions 17-19
|
Bond |
Coupon Rate |
Time-to-Maturity |
Time-to-Maturity |
Spot Rates |
|
|
X |
8% |
3 years |
1 year |
8% |
|
|
Y |
7% |
3 years |
2 years |
9% |
|
|
Z |
6% |
3 years |
3 years |
10% |
All three bonds pay interest annually.
In: Finance
1.A key issue with modeling net returns as a normal distribution is
| A. |
Returns only make sense in the long run. Hence, in the short run, returns do not follow normal distribution |
|
| B. |
Stock Returns have a finite downside of -100% |
|
| C. |
Due to stock price decimalization, some returns are irrational numbers which are not part of the normal distribution |
|
| D. |
Returns are not mean zero |
2.
In a firm commitment procedure, the majority of risk of the issue is borne by
| A. |
Underwriter Syndicate |
|
| B. |
Designated Market Maker |
|
| C. |
Issuing Firm |
|
| D. |
Credit rating agencies |
In: Finance
Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows during the next 3 years, after which FCF is expected to grow at a constant 7.40% rate. Dozier's WACC is 11.40%.
|
Year |
0 |
1 |
2 |
3 |
|
FCF ($ millions) |
10 |
20 |
30 |
a. What is Dozier's horizon, or continuing, value?
b. What is the firm's value today?
c. Suppose Dozier has $200 million of debt and 100 million shares of stock outstanding. What is your estimate of the current price per share?
In: Finance
There are 2 user groups for your product. Group 1 are students with a demand given by 2000-50 P1 = Q1 and Group 2 are other customers with a demand given by 5500- 100 P2 = Q2. Total Cost = Fixed Cost + Variable Cost = $20,000 + $15Q Marginal Cost = ∂TC/∂Q = $15 for each. Note: Q= Q1 + Q2. Solve for P1 Q1 P2 Q2.
Please solve for the equilibrium prices and quantities for both user groups P1 P2 Q1 Q2
Solve for the price elasticity of demand for both groups at equilibrium quantities.
In: Economics
Data for Hermann Corporation are shown below:
| Per Unit | Percent of Sales | ||||||
| Selling price | $ | 80 | 100 | % | |||
| Variable expenses | 44 | 55 | |||||
| Contribution margin | $ | 36 | 45 | % | |||
Fixed expenses are $76,000 per month and the company is selling 2,500 units per month.
2-a. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 20%.
2-b. Should the higher-quality components be used?
In: Accounting
1. Suppose the demand function of an industry is P=100-0.5X and there are two firms A and B in it. Futher assume that the firm A has a constant cost function of CA = 5xA and firm B has an increasing cost function CB =0.5xB. (X= xA +xB ).
a. What would the reaction function of each firm?
b. What would be the profit of each firm? c. What would the out put of each firm? d. What would be the equilibrium price?
I'm stuck with this question. Can somebody help me? thank you so much.
In: Economics
An airline always overbooks if possible. A particular plane has 100 seats on a flight in which a ticket sells for $325. The airline sells 105 such tickets for the flight.
(a) If the probability of an individual not showing up is 0.065, assuming independence, what is the probability that the airline can accommodate all the passengers who do show up? Show your work.
(b) If the airline must return the $325 ticket price plus a penalty of $410 to each passenger that cannot get on the flight, what is the expected payout (penalty plus ticket refund) that the airline will pay? Show your work.
In: Statistics and Probability