Questions from Corporate Finance

Q: Why is a preferred stock with a dividend tied to short-

Why is a preferred stock with a dividend tied to short-term interest rates an attractive short-term investment for corporations with excess cash?

Q: Are poison pills good or bad for stockholders? How do you

Are poison pills good or bad for stockholders? How do you think acquiring firms are able to get around poison pills?

Q: What is the difference between liquidation and reorganization?

What is the difference between liquidation and reorganization?

Q: At one point, Duracell International confirmed that it was planning to

At one point, Duracell International confirmed that it was planning to open battery manufacturing plants in China and India. Manufacturing in these countries allows Duracell to avoid import duties of...

Q: Would the goal of maximizing the value of the stock differ for

Would the goal of maximizing the value of the stock differ for financial management in a foreign country? Why or why not?

Q: Is it possible for a firm to have too much cash?

Is it possible for a firm to have too much cash? Why would shareholders care if a firm accumulates large amounts of cash?

Q: You notice that shares of stock in the Patel Corporation are going

You notice that shares of stock in the Patel Corporation are going for $50 per share. Call options with an exercise price of $35 per share are selling for $10. What’s wrong here? Describe how you can...

Q: On subsidized Stafford loans, a common source of financial aid for

On subsidized Stafford loans, a common source of financial aid for college students, interest does not begin to accrue until repayment begins. Who receives a bigger subsidy, a freshman or a senior? Ex...

Q: If a market is semi strong form efficient, is it also

If a market is semi strong form efficient, is it also weak form efficient? Explain.

Q: A stock is currently selling for $38 per share. A

A stock is currently selling for $38 per share. A call option with an exercise price of $40 sells for $3.80 and expires in three months. If the risk-free rate of interest is 2.6 percent per year, comp...