Questions from Corporate Finance

Q: North Pole Fishing Equipment Corporation and South Pole Fishing Equipment Corporation would

North Pole Fishing Equipment Corporation and South Pole Fishing Equipment Corporation would have identical equity betas of 1.10 if both were all equity financed. The market value information for each...

Q: Discuss the accounting criteria for determining whether a lease must be reported

Discuss the accounting criteria for determining whether a lease must be reported on the balance sheet. In each case give a rationale for the criterion.

Q: What are the prices of a call option and a put option

What are the prices of a call option and a put option with the following characteristics? Stock price = $57 Exercise price = $60 Risk-free rate = 6% per year, compounded continuously Maturity...

Q: In the previous question, over what range of lease payments will

In the previous question, over what range of lease payments will the lease be profitable for both parties? Required information You work for a nuclear research laboratory that is contemplating leasing...

Q: Explain why a swap is effectively a series of forward contracts.

Explain why a swap is effectively a series of forward contracts. Suppose a firm enters a swap agreement with a swap dealer. Describe the nature of the default risk faced by both parties.

Q: Jet Black is an international conglomerate with a petroleum division and is

Jet Black is an international conglomerate with a petroleum division and is currently competing in an auction to win the right to drill for crude oil on a large piece of land in one year. The current...

Q: What is dilution, and why does it occur when warrants are

What is dilution, and why does it occur when warrants are exercised?

Q: A warrant gives its owner the right to purchase three shares of

A warrant gives its owner the right to purchase three shares of common stock at an exercise price of $53 per share. The current market price of the stock is $58. What is the minimum value of the warra...

Q: A company produces an energy-intensive product and uses natural gas

A company produces an energy-intensive product and uses natural gas as the energy source. The competition primarily uses oil. Explain why this company is exposed to fluctuations in both oil and natura...

Q: You are short 25 gasoline futures contracts, established at an initial

You are short 25 gasoline futures contracts, established at an initial settle price of $2.46 per gallon, where each contract represents 42,000 gallons. Over the subsequent four trading days, gasoline...