Questions from Corporate Finance

Q: Jet Black is an international conglomerate with a petroleum division and is

Jet Black is an international conglomerate with a petroleum division and is currently competing in an auction to win the right to drill for crude oil on a large piece of land in one year. The current...

Q: A warrant gives its owner the right to purchase three shares of

A warrant gives its owner the right to purchase three shares of common stock at an exercise price of $64 per share. The current market price of the stock is $68. What is the minimum value of the warra...

Q: In the previous problem, suppose the fixed asset actually falls into

In the previous problem, suppose the fixed asset actually falls into the three-year MACRS class. All the other facts are the same. What is the project’s Year 1 net cash flow now? Year 2? Year 3? What...

Q: Your company is deciding whether to invest in a new machine.

Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $530,000 per year. You believe the technology used in the machine has a 10-year life; in other w...

Q: Suppose a stock had an initial price of $64 per share

Suppose a stock had an initial price of $64 per share, paid a dividend of $1.20 per share during the year, and had an ending share price of $73. Compute the percentage total return.

Q: With regard to bid and ask prices on a Treasury bond,

With regard to bid and ask prices on a Treasury bond, is it possible for the bid price to be higher? Why or why not?

Q: Even though most corporate bonds in the United States make coupon payments

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par val...

Q: Based on the following information, calculate the expected return and standard

Based on the following information, calculate the expected return and standard deviation for the two stocks:

Q: Suppose stock returns can be explained by a two-factor model

Suppose stock returns can be explained by a two-factor model. The firm-specific risks for all stocks are independent. The following table shows the information for two diversified portfolios: If the...

Q: Kiedis, Corp., has interest-bearing debt with a market

Kiedis, Corp., has interest-bearing debt with a market value of $65 million. The company also has 2 million shares that sell for $25 per share. What is the debt–equity ratio for this company based on...