Questions from General Investment

Q: Joan Tam, CFA, believes she has identified an arbitrage opportunity

Joan Tam, CFA, believes she has identified an arbitrage opportunity for a commodity as indicated by the following information: Spot price for commodity……………………………………………..$120 Futures price for commodi...

Q: Michelle Industries issued a Swiss franc–denominated 5-year discount

Michelle Industries issued a Swiss franc–denominated 5-year discount note for SFr200 million. The proceeds were converted to U.S. dollars to purchase capital equipment in the United States. The compan...

Q: A firm has a tax burden ratio of .75, a

A firm has a tax burden ratio of .75, a leverage ratio of 1.25, an interest burden of .6, and a return on sales of 10%. The firm generates $2.40 in sales per dollar of assets. What is the firm’s ROE?...

Q: Use the following cash flow data for Rocket Transport to find Rocket’s

Use the following cash flow data for Rocket Transport to find Rocket’s a. Net cash provided by or used in investing activities. b. Net cash provided by or used in financing activities. c. Net increase...

Q: a. If the exchange rate for the British pound goes from

a. If the exchange rate for the British pound goes from U.S.$1.55 to U.S.$1.35, then the pound has: i. Appreciated and the British will find U.S. goods cheaper. ii. Appreciated and the British will fi...

Q: The Crusty Pie Co., which specializes in apple turnovers, has

The Crusty Pie Co., which specializes in apple turnovers, has a return on sales higher than the industry average, yet its ROA is the same as the industry average. How can you explain this?

Q: The ABC Corporation has a profit margin on sales below the industry

The ABC Corporation has a profit margin on sales below the industry average, yet its ROA is above the industry average. What does this imply about its asset turnover?

Q: Firm A and Firm B have the same ROA, yet Firm

Firm A and Firm B have the same ROA, yet Firm A’s ROE is higher. How can you explain this?

Q: Use the DuPont system and the following data to find return on

Use the DuPont system and the following data to find return on equity. Leverage ratio (assets/equity) ……………………………. 2.2 Total asset turnover…………………………………………….2.0 Net profit margin………………………………………………...

Q: Recently, Galaxy Corporation lowered its allowance for doubtful accounts by reducing

Recently, Galaxy Corporation lowered its allowance for doubtful accounts by reducing bad debt expense from 2% of sales to 1% of sales. Ignoring taxes, what are the immediate effects on (a) operating i...