Questions from Financial Management

Q: Seth Harris is an avid investor who likes to speculate on stock

Seth Harris is an avid investor who likes to speculate on stock price changes. Lately he’s become bored with the slow movement of most stock prices and thinks options might be more exciting. He’s be...

Q: Whole Foods Inc. paid a quarterly dividend of $0.

Whole Foods Inc. paid a quarterly dividend of $0.47 recently. Treasury bills are yielding 4%, and the average stock is returning about 11%. Whole Foods is a stable company. The return on its stock r...

Q: Seattle Software Inc. recently paid an annual dividend of $1

Seattle Software Inc. recently paid an annual dividend of $1.95 per share and is expected to grow at a 15% rate indefinitely. Short term federal government securities are paying 4% while an average s...

Q: Bergman Corp. has experienced zero growth over the last seven years

Bergman Corp. has experienced zero growth over the last seven years paying an annual dividend of $2.00 per share. Investors generally expect this performance to continue. Bergman stock is currently s...

Q: Weisman Electronics of the previous problem is considering acquiring an unrelated business

Weisman Electronics of the previous problem is considering acquiring an unrelated business. Management thinks the move could change the firm’s stock price by moving its beta up or down and decreasing...

Q: Broken Wing Airlines just paid an annual dividend of $2,

Broken Wing Airlines just paid an annual dividend of $2, has a beta of 1.3, and a growth rate of 6% for the foreseeable future. The current return on the market is 10% and Treasury bills earn 4%. If...

Q: Lipson Ltd. expects a constant growth rate of 5% in

Lipson Ltd. expects a constant growth rate of 5% in the future. Treasury bills yield 8% and the market is returning 13% on an average issue. Lipson's last annual dividend was $1.35. The company's be...

Q: Wayne Merritt drives from Cleveland to Chicago frequently and has noticed that

Wayne Merritt drives from Cleveland to Chicago frequently and has noticed that traffic and weather make a big difference in the time it takes to make the trip. As a result, he has a hard time plannin...

Q: Suppose dice had four sides instead of six, so rolling a

Suppose dice had four sides instead of six, so rolling a single die would produce equally likely numbers from one to four, and rolling two dice would produce numbers from two to eight. a. Compute th...

Q: Nu-Mode Fashions Inc. manufactures quality women’s wear, and

Nu-Mode Fashions Inc. manufactures quality women’s wear, and needs to borrow money to get through a brief cash shortage. Unfortunately, sales are down, and lenders consider the firm risky. The CFO h...