Questions from Corporate Finance

Q: A put option and a call option with an exercise price of

A put option and a call option with an exercise price of $85 and three months to expiration sell for $2.40 and $5.09, respectively. If the risk-free rate is 4.8 percent per year, compounded continuous...

Q: Your company currently uses traditional capital budgeting techniques, including net present

Your company currently uses traditional capital budgeting techniques, including net present value. After hearing about the use of real option analysis, your boss decides that your company should use r...

Q: Why will convertible bonds not be voluntarily converted to stock before expiration

Why will convertible bonds not be voluntarily converted to stock before expiration?

Q: What impact did this change in payables policy have on BlueSky’s operating

What impact did this change in payables policy have on BlueSky’s operating cycle? Its cash cycle?

Q: Why does the value of a share of stock depend on dividends

Why does the value of a share of stock depend on dividends?

Q: If a company moves to a JIT inventory management system, what

If a company moves to a JIT inventory management system, what will happen to inventory turnover? What will happen to total asset turnover? What will happen to return on equity (ROE)?

Q: Suppose the current exchange rate for the Polish zloty is Z 3

Suppose the current exchange rate for the Polish zloty is Z 3.14. The expected exchange rate in three years is Z 3.23. What is the difference in the annual inflation rates for the United States and Po...

Q: What are the three factors that determine a company’s price−earnings

What are the three factors that determine a company’s price−earnings ratio?

Q: Suppose a certain stock currently sells for $30 per share.

Suppose a certain stock currently sells for $30 per share. If a put option and a call option are available with $30 exercise prices, which do you think will sell for more? Explain.

Q: You own a callable, convertible bond with a conversion ratio of

You own a callable, convertible bond with a conversion ratio of 24.25. The stock is currently selling for $48 per share. The issuer of the bond has announced a call at a call price of 110. What are yo...