Questions from Corporate Finance

Q: Newtech Corp. is going to adopt a new chip-testing

Newtech Corp. is going to adopt a new chip-testing device that can greatly improve its production efficiency. Do you think the lead engineer can profit from purchasing the firm’s stock before the news...

Q: Delta, United, and American Airlines announced purchases of planes on

Delta, United, and American Airlines announced purchases of planes on July 18 (7/18), February 12 (2/12), and October 7 (10/7), respectively. Given the following information, calculate the cumulative...

Q: Refer back to Table 10.2. What range of returns

Refer back to Table 10.2. What range of returns would you expect to see 68 percent of the time for large-company stocks? What about 95 percent of the time? Table 10.2

Q: In the previous problem, what would the risk-free rate

In the previous problem, what would the risk-free rate have to be for the two stocks to be correctly priced?

Q: Floyd Industries stock has a beta of 1.3. The

Floyd Industries stock has a beta of 1.3. The company just paid a dividend of $.95, and the dividends are expected to grow at 4.5 percent per year. The expected return on the market is 11 percent, and...

Q: TransTrust Corp. has changed how it accounts for inventory. Taxes

TransTrust Corp. has changed how it accounts for inventory. Taxes are unaffected, although the resulting earnings report released this quarter is 20 percent higher than what it would have been under t...

Q: Based on the following information, calculate the expected return and standard

Based on the following information, calculate the expected return and standard deviation:

Q: You find a certain stock that had returns of 12 percent,

You find a certain stock that had returns of 12 percent, 221 percent, 9 percent, and 32 percent for four of the last five years. If the average return of the stock over this period was 11 percent, wha...

Q: You own a portfolio that has $2,100 invested in

You own a portfolio that has $2,100 invested in Stock A and $3,200 invested in Stock B. If the expected returns on these stocks are 11 percent and 14 percent, respectively, what is the expected return...

Q: Advance, Inc., is trying to determine its cost of debt

Advance, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 17 years to maturity that is quoted at 95 percent of face value. The issue makes semiannual payments...