Questions from Corporate Finance

Q: At one point, certain U.S. Treasury bonds were

At one point, certain U.S. Treasury bonds were callable. Consider the prices in the following three Treasury issues as of May 15, 2021: The bond in the middle is callable in February 2022. What is t...

Q: The following Treasury bond quote appeared in The Wall Street Journal on

The following Treasury bond quote appeared in The Wall Street Journal on May 11, 2004: Why would anyone buy this Treasury bond with a negative yield to maturity? How is this possible?

Q: When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to

When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former...

Q: You are planning to save for retirement over the next 30 years

You are planning to save for retirement over the next 30 years. To save for retirement, you will invest $700 per month in a stock account in real dollars and $300 per month in a bond account in real d...

Q: After successfully completing your corporate finance class, you feel the next

After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Cornwall Enterprises. Unfortunately, you will be the only person...

Q: A Japanese company has a bond outstanding that sells for 96.

A Japanese company has a bond outstanding that sells for 96.318 percent of its ¥100,000 par value. The bond has a coupon rate of 3.4 percent paid annually and matures in 16 years. What is the yield to...

Q: The Dahlia Flower Co. has earnings of $3.64

The Dahlia Flower Co. has earnings of $3.64 per share. The benchmark PE for the company is 18. What stock price would you consider appropriate? What if the benchmark PE were 21?

Q: Z Space, Inc., is a new company and currently has

Z Space, Inc., is a new company and currently has negative earnings. The company’s sales are $2.7 million and there are 175,000 shares outstanding. If the benchmark price-sales ratio is 4.3, what is y...

Q: Quinoa Farms just paid a dividend of $2.95 on

Quinoa Farms just paid a dividend of $2.95 on its stock. The growth rate in dividends is expected to be a constant 3.4 percent per year indefinitely. Investors require a return of 15 percent for the f...

Q: Metallica Bearings, Inc., is a young start-up company

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 9 years because the firm needs to plow back its earnings to fuel growth. The company will pa...