Questions from Corporate Finance

Q: Gasworks, Inc., has been approached to sell up to 5

Gasworks, Inc., has been approached to sell up to 5 million gallons of gasoline in three months at a price of $3.65 per gallon. Gasoline is currently selling on the wholesale market at $3.30 per gallo...

Q: Eckely, Inc., recently issued bonds with a conversion ratio of

Eckely, Inc., recently issued bonds with a conversion ratio of 17.5. If the stock price at the time of the bond issue was $48.53, what was the conversion premium?

Q: When should a firm force conversion of convertibles? Why?

When should a firm force conversion of convertibles? Why?

Q: What is the difference between a forward contract and a futures contract

What is the difference between a forward contract and a futures contract? Why do you think that futures contracts are much more common? Are there any circumstances under which you might prefer to use...

Q: Suppose a financial manager buys call options on 50,000 barrels

Suppose a financial manager buys call options on 50,000 barrels of oil with an exercise price of $95 per barrel. She simultaneously sells a put option on 50,000 barrels of oil with the same exercise p...

Q: For the year just ended, you have gathered the following information

For the year just ended, you have gathered the following information about the Holly Corporation: a. A $200 dividend was paid. b. Accounts payable increased by $500. c. Fixed asset purchases were $900...

Q: Indicate the effect that the following will have on the operating cycle

Indicate the effect that the following will have on the operating cycle. Use the letter I to indicate an increase, the letter D for a decrease, and the letter N for no change. a. Receivables average g...

Q: Milano Pizza Club owns three identical restaurants popular for their specialty pizzas

Milano Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt–equity ratio of 40 percent and makes interest payments of $41,000 at the end of each y...

Q: Comment on the following remarks: a. Leasing reduces risk

Comment on the following remarks: a. Leasing reduces risk and can reduce a firm’s cost of capital. b. Leasing provides 100 percent financing. c. If the tax advantages of leasing were eliminated, leasi...

Q: Assume that your company does not contemplate paying taxes for the next

Assume that your company does not contemplate paying taxes for the next several years. What are the cash flows from leasing in this case? You work for a nuclear research laboratory that is contemplati...