Questions from Financial Management

Q: Define the following: a. The market value of an

Define the following: a. The market value of an asset b. Market equilibrium

Q: Vanity Press, Inc., has annual credit sales of $1

Vanity Press, Inc., has annual credit sales of $1.6 million and a gross profit margin of 35 percent. a. If the firm wishes to maintain an average collection period of 50 days, what level of accounts...

Q: The “asked” discount on a six-month Treasury bill

The “asked” discount on a six-month Treasury bill was recently quoted as 3.02 percent. Approximately how much would you have to pay to buy one of these Treasury bills ($10,000 maturity value)?

Q: Explain the Rule of 72. How can it be used in

Explain the Rule of 72. How can it be used in finance applications?

Q: How much would you have to pay for a U.S

How much would you have to pay for a U.S. government bond ($1,000 maturity value) scheduled to mature in November 2017 and quoted at 147:27 “asked”? The coupon rate on the bond is 9⅞ percent.

Q: Zip Boys has outstanding zero coupon bonds maturing in 2018.

Zip Boys has outstanding zero coupon bonds maturing in 2018. a. How would you compute the yield-to-maturity on bonds like these? b. How do bondholders get a return when they buy these bonds?

Q: The bonds of Columbia Gas paid no interest in 1993 because the

The bonds of Columbia Gas paid no interest in 1993 because the firm had declared bankruptcy. One issue of these bonds, the 8¼ percent coupon bonds due in 1996, was selling at 109 percent of par value,...

Q: Hexcel has a 7 percent coupon rate bond issue outstanding that matures

Hexcel has a 7 percent coupon rate bond issue outstanding that matures in 2017. The Wall Street Journal reports a bond price of $582.50. These bonds are convertible into common stock. Why do you think...

Q: Disney Enterprises issued 7.55% senior debentures (bonds)

Disney Enterprises issued 7.55% senior debentures (bonds) on July 15, 1993, with a 100-year maturity (that is, due on July 15, 2093). Suppose an investor purchased one of these bonds on July 15, 2003...

Q: Murphy’s Brewhouse was a rapidly expanding chain of home-brew bars

Murphy’s Brewhouse was a rapidly expanding chain of home-brew bars. The beer was not very good, but hopes were high when the company went public three years ago, because of founder/owner Kevin Murphy’...