Questions from Corporate Finance

Q: Refer back to Table 10.2. What range of returns

Refer back to Table 10.2. What range of returns would you expect to see 68 percent of the time for long-term corporate bonds? What about 95 percent of the time?

Q: Asset W has an expected return of 11.9 percent and

Asset W has an expected return of 11.9 percent and a beta of 1.2. If the risk-free rate is 4 percent, complete the following table for portfolios of Asset W and a risk-free asset. Illustrate the relat...

Q: The Saunders Investment Bank has the following financing outstanding. What is

The Saunders Investment Bank has the following financing outstanding. What is the WACC for the company? Debt: 50,000 bonds with a coupon rate of 5.7 percent and a current price quote of 106.5; the bon...

Q: List the three assumptions that lie behind the Modigliani–Miller theory

List the three assumptions that lie behind the Modigliani–Miller theory in a world without taxes. Are these assumptions reasonable in the real world? Explain.

Q: Use the option quote information shown here to answer the questions that

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $83. a. Are the call options in the money? What is the intrinsic value of an RWJ C...

Q: Tool Manufacturing has an expected EBIT of $67,000 in

Tool Manufacturing has an expected EBIT of $67,000 in perpetuity and a tax rate of 35 percent. The firm has $130,000 in outstanding debt at an interest rate of 8 percent, and its unlevered cost of cap...

Q: Bruin Industries just issued $265,000 of perpetual 8 percent

Bruin Industries just issued $265,000 of perpetual 8 percent debt and used the proceeds to repurchase stock. The company expects to generate $123,000 of earnings before interest and taxes in perpetuit...

Q: The Gecko Company and the Gordon Company are two firms whose business

The Gecko Company and the Gordon Company are two firms whose business risk is the same but that have different dividend policies. Gecko pays no dividend, whereas Gordon has an expected dividend yield...

Q: Beasley, Inc. is going to elect nine board members next

Beasley, Inc. is going to elect nine board members next month. Betty Brown owns 12.4 percent of the total shares outstanding. How confident can she be of having one of her candidate friends elected un...

Q: Wuttke Corp. wants to raise $5,375,000

Wuttke Corp. wants to raise $5,375,000 via a rights offering. The company currently has 950,000 shares of common stock outstanding that sell for $55 per share. Its underwriter has set a subscription p...