Finance

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Calculate Stock Price Per Share With Market And Book Value Being Equal

QuestionA firm has a market value equal to its book value. Currently, the firm has excess cash of $500 and other assets of $9,500. Equity is worth $10,000. The firm has 250 shares of stock outstanding and net income of $1,400. What will the stock price per share be if the firm pays out its excess ca ... Read More

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Calculation Of Debt To Equity Value With Assets Market Value Given

QuestionA firm’s assets have a market value of $500m; the asset returns have a standard deviation of 25% per year. The firm is financed with zero coupon debt having a face value of $400m and maturing in 5 years. The (continuously compounded) risk free rate is 5%. What is the value of the debt ... Read More

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Calculation Of Debt To Equity Value When Internally Financed

QuestionA firm’s assets have a market value of $500m; the asset returns have a standard deviation of 25% per year. The firm is financed with zero coupon debt having a face value of $400m and maturing in 5 years. The (continuously compounded) risk free rate is 5%. Suppose the firm now has a pot ... Read More

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Calculation Of Net Present Value With Standard Discount Cash Flow Analysis

QuestionSuppose GeKay Inc. has a two-year lease over a small copper deposit; the government acquires all rights to the property at the end of the lease. It is known that the deposit contains eight million pounds of copper. Mining would involve a one-year development phase that would have an immediat ... Read More

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Calculate Economic Value Added With Debt Cost And EBIT Rates Given

QuestionWestbrook Inc. is financed with debt that costs it 5% (pre-tax) or $12.5m annually and expects to generate an EBIT of $50m per year perpetually. The company is at its target debt/equity ratio of 1.  Depreciation is expected to remain at $2.5m annually and taxes at the rate of 40% (for t ... Read More

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Stock Repurchase Financed By Debt And Decline Of Share Price

QuestionA firm announces its intent to undertake a levered recapitalization, issuing debt to repurchase a fraction of the outstanding common stock. Upon the announcement, its stock price declines. Describe (list) 2 reasons why you might have expected that the price would instead have risen and 2 rea ... Read More

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Calculate Stock Price With Debt To Value Ratio, Net Income, Dividend Payout Ratio Being Given

QuestionGeKay Inc. currently (January 1) has a net income of $10,000,000 which is expected to grow indefinitely (perpetuity) at 10% per annum. The firm is financed at a debt-to -value ratio of 30%. The firm has a 50% dividend payout to shareholders (dividends paid at year-end), with 10m shares of co ... Read More

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Stock Diversification Effect On Share Price

QuestionGeKay stock is worth $100, or $80, or $60. Investors believe that each case is equally likely so that the current share price is the average, namely $80.  Suppose Mr. Satanak, the company CEO, announces that he will sell most of his holdings of the stock to diversify (and investors beli ... Read More

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Calculation Of True Share Price For Diversification

QuestionGeKay stock is worth $100, or $80, or $60. Investors believe that each case is equally likely so that the current share price is the average, namely $80.  Suppose Mr. Satanak, the company CEO, announces that he will sell most of his holdings of the stock to diversify (and investors beli ... Read More

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Worth Of Silver In The Dollar Of 1800s

QuestionAn original United States silver dollar from the late 1800s consists of about 24 grains of silver. Suppose that at current prices, the silver content of this coin is worth $2.25. Assume these coins are in plentiful supply and are not collector’s items so they have no numismatic value. ... Read More

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Use Of Big Data In Financial Risk Management Or Financial Regulatory Reporting

QuestionMake a presentation of about 30 slides for the topic “use of Big Data in Financial Risk Management/ Financial Regulatory Reporting”. SummaryThe question belongs to Finance and it discusses about the use of Big Data in Financial Risk Management or Financial Regulatory Reporting. ... Read More

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Comparing Two Articles On International New Ventures

QuestionZahra, S.A. (2005) ‘A theory of international new ventures: A decade of research’, Journal of International Business Studies, 36 (1), January, pp. 20–28. Explain how the article builds on the seminal work of Oviatt and McDougall in their paper, Toward a Theory of Internatio ... Read More

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