QUESTION Halcyon Lines is considering the purchase of a new bulk carrier for $8 million. The forecasted revenues are $5 million a year and operating costs are $4 million. A major refit costing $2 million will be required after both the fifth and tenth years. After 15 years, the ship is expected to be sold […]
QUESTION The Bank of Tiny town has two $20,000 loans with the following characteristics: Loan A has an expected return of 10 percent and a standard deviation of returns of 10 percent. The expected return and standard deviation of returns for loan B are 12 percent and 20 percent, respectively. a. If the correlation between […]
QUESTION What is organizational structure and what are organizational controls? What are the differences between strategic controls and financial controls? What is the importance of these differences? An organizational structure defines how activities such as task allocation, coordination and supervision are directed towards the achievement of organizational aims. It can also be considered as the […]
QUESTION MNO, Inc., a publicly traded manufacturing firm in the United States, has provided the following financial information in its application for a loan. All numbers are in thousands of dollars. Assets Liabilities and Equity Cash $20 ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION What do you think might be advantages of making business executives adhere to a code of ethics as do physicians and lawyers? What do you think might be advantages of making business executives adhere to a code of ethics as do physicians and lawyers? Solution: Ethics are the norms or standards or set of […]
QUESTION Follow Bank has a $1 million position in a five-year, zero-coupon bond with a face value of $1,402,552. The bond is trading at a yield to maturity of 7.00 percent. The historical mean change in daily yields is 0.0 percent, and the standard deviation is 12 basis points. a. What is the modified duration […]
QUESTION Chiptech, Inc., is an established computer chip firm with several profitable existing products as well as some promising new products in development. The company earned $1 a share last year, and just paid out a dividend of $.50 per share. Investors believe the company plans to maintain its dividend payout ratio at 50%. ROE […]
QUESTION How did two pieces of regulatory legislationthe DIDMCA in 1980 and the DIA in 1982change the operating profitability of savings institutions in the early 1980s? What impact did these pieces of legislation ultimately have on the risk posture of the savings institutions industry? How did the FSLIC react to this change in operating performance […]
QUESTION The market consensus is that Analog Electronic Corporation has an ROE 5 9%, has a beta of 1.25, and plans to maintain indefinitely its traditional plowback ratio of 2/3. This years earnings were $3 per share. The annual dividend was just paid. The consensus estimate of the coming years market return is 14%, and […]
QUESTION Which intermediaries best fulfill the intergenerational wealth transfer function? What is this wealth transfer process? Life insurance and pension funds often receive special tax reliefs and other subsidies to assist in the transfer of wealth from one generation to another. In effect, the wealth transfer process allows the accumulation of wealth by one generation […]
