Questions from Financial Management

Q: What effect does the expected growth rate of a firm’s stock price

What effect does the expected growth rate of a firm’s stock price (subsequent to issue) have on its ability to raise additional funds through (a) Convertibles and (b) Warrants?

Q: a. How would a firm’s decision to pay out a higher

a. How would a firm’s decision to pay out a higher percentage of its earnings as dividends affect each of the following? (1) The value of its long-term warrants (2) The likelihood that its convertible...

Q: Suppose a company simultaneously issues $50 million of convertible bonds with

Suppose a company simultaneously issues $50 million of convertible bonds with a coupon rate of 9% and $50 million of pure bonds with a coupon rate of 12%. Both bonds have the same maturity. Does the f...

Q: Assume that you have just been hired as business manager of Campus

Assume that you have just been hired as business manager of Campus Deli (CD), which is located adjacent to the campus. Sales were $1,100,000 last year, variable costs were 60% of sales, and fixed cost...

Q: For purposes of measuring a firm’s leverage, should preferred stock be

For purposes of measuring a firm’s leverage, should preferred stock be classified as debt or equity? Does it matter if the classification is being made (a) By the firm’s management, (b) By creditors,...

Q: You are told that one corporation just issued $100 million of

You are told that one corporation just issued $100 million of preferred stock and another purchased $100 million of preferred stock as an investment. You are also told that one firm has an effective t...

Q: Suppose interest rates on Treasury bonds rose from 5% to 9

Suppose interest rates on Treasury bonds rose from 5% to 9% as a result of higher interest rates in Europe. What effect would this have on the price of an average company’s common stock?

Q: Kaufman Enterprises has bonds outstanding with a $1,000 face

Kaufman Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is $1,175. The bonds may be called...

Q: One often finds that a company’s bonds have a higher yield than

One often finds that a company’s bonds have a higher yield than its preferred stock even though an investor considers the bonds to be less risky than the preferred. What causes this yield differential...

Q: Distinguish between operating leases and financial leases. Would a firm be

Distinguish between operating leases and financial leases. Would a firm be more likely to finance a fleet of trucks or a manufacturing plant with an operating lease? Explain.