Questions from Corporate Finance

Q: You find a zero coupon bond with a par value of $

You find a zero coupon bond with a par value of $10,000 and 17 years to maturity. If the yield to maturity on this bond is 4.9 percent, what is the dollar price of the bond? Assume semiannual compound...

Q: Using the following returns, calculate the average returns, the variances

Using the following returns, calculate the average returns, the variances, and the standard deviations for X and Y:

Q: A portfolio is invested 20 percent in Stock G, 55 percent

A portfolio is invested 20 percent in Stock G, 55 percent in Stock J, and 25 percent in Stock K. The expected returns on these stocks are 9 percent, 11 percent, and 14 percent, respectively. What is t...

Q: You are forming an equally weighted portfolio of stocks. Many stocks

You are forming an equally weighted portfolio of stocks. Many stocks have the same beta of .84 for Factor 1 and the same beta of 1.69 for Factor 2. All stocks also have the same expected return of 11...

Q: Fama’s Llamas has a weighted average cost of capital of 9.

Fama’s Llamas has a weighted average cost of capital of 9.8 percent. The company’s cost of equity is 13 percent, and its cost of debt is 6.5 percent. The tax rate is 35 percent. What is Fama’s debt–eq...

Q: Harrison, Inc., has the following book value balance sheet:

Harrison, Inc., has the following book value balance sheet: a. What is the debt–equity ratio based on book values? b. Suppose the market value of the company’s de...

Q: Ignoring taxes in Problem 6, what is the price per share

Ignoring taxes in Problem 6, what is the price per share of equity under Plan I? Plan II? What principle is illustrated by your answers?

Q: Agency Costs Fountain Corporation’s economists estimate that a good business environment and

Agency Costs Fountain Corporation’s economists estimate that a good business environment and a bad business environment are equally likely for the coming year. The managers of the co...

Q: What is forecasting risk? In general, would the degree of

What is forecasting risk? In general, would the degree of forecasting risk be greater for a new product or a cost-cutting proposal? Why?

Q: Bill plans to open a self-serve grooming center in a

Bill plans to open a self-serve grooming center in a storefront. The grooming equipment will cost $265,000, to be paid immediately. Bill expects aftertax cash inflows of $59,000 annually for seven yea...