Questions from Corporate Finance

Q: A company has a single zero coupon bond outstanding that matures in

A company has a single zero coupon bond outstanding that matures in 10 years with a face value of $15 million. The current value of the company’s assets is $13.4 million, and the standard deviation of...

Q: T-bills currently yield 4.8 percent. Stock in

T-bills currently yield 4.8 percent. Stock in Nina Manufacturing is currently selling for $63 per share. There is no possibility that the stock will be worth less than $61 per share in one year. a. Wh...

Q: Ken is interested in buying a European call option written on Southeastern

Ken is interested in buying a European call option written on Southeastern Airlines, Inc., a non-dividend–paying common stock, with a strike price of $75 and one year until expiration. Currently, Sout...

Q: Rob wishes to buy a European put option on BioLabs, Inc

Rob wishes to buy a European put option on BioLabs, Inc., a non-dividend–paying common stock, with a strike price of $40 and six months until expiration. BioLabs’ common stock is currently selling for...

Q: Maverick Manufacturing, Inc., must purchase gold in three months for

Maverick Manufacturing, Inc., must purchase gold in three months for use in its operations. Maverick’s management has estimated that if the price of gold were to rise above $1,530 per ounce, the firm...

Q: An investor is said to take a position in a “collar

An investor is said to take a position in a “collar” if she buys the asset, buys an out-of-the-money put option on the asset, and sells an out-of-the-money call option on the asset. The two options sh...

Q: McLemore Industries has a zero coupon bond issue that matures in two

McLemore Industries has a zero coupon bond issue that matures in two years with a face value of $50,000. The current value of the company’s assets is $29,000, and the standard deviation of the return...

Q: Bishop, Inc., has current assets of $5,700

Bishop, Inc., has current assets of $5,700, net fixed assets of $27,000, current liabilities of $4,400, and long-term debt of $12,900. What is the value of the shareholders’ equity account for this fi...

Q: In a typical month, the Jeremy Corporation receives 140 checks totaling

In a typical month, the Jeremy Corporation receives 140 checks totaling $124,000. These are delayed four days on average. What is the average daily float?

Q: Are there any circumstances under which an investor might be more concerned

Are there any circumstances under which an investor might be more concerned about the nominal return on an investment than the real return?